<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal year ended December 31, 1993 Commission file number 0-3613
SOUTHTRUST CORPORATION
(Exact name of registrant specified in its charter)
<TABLE>
<S> <C>
Delaware 63-574085
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
420 North 20th Street,
Birmingham, Alabama 35203
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrants telephone number, including area code: (205) 254-5509
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK -- PAR VALUE $2.50 PER SHARE
(Title of Class)
Indicate by a check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation is not contained herein, and will not be contained, to
the best or the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
State the aggregate market value of the voting stock held by non-affiliates
of the registrant as of Janaury 31, 1994.
Common Stock, par value $2.50 per share -- $1,416,100,000
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of January 31, 1994.
Common Stock, par value $2.50 per share -- 79,425,781 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the year ended December
31, 1993, are incorporated by reference into Parts I and II.
Portions of the annual proxy statement for the annual meeting of
stockholders on April 20, 1994 are incorporated by reference into Part III.
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<PAGE> 2
PART I
Item 1 Business
SouthTrust Corporation ("SouthTrust" or the "Company") is a
registered bank holding company incorporated under the laws of
Delaware in 1968. SouthTrust has 40 bank subsidiaries and 8
bank-related subsidiaries. Of the 40 bank subsidiaries, 25 are
located in Alabama, 8 are located in Florida, 2 are located in
Georgia, 2 are located in South Carolina, 2 are located on North
Carolina and 1 is located in Tennessee. At December 31, 1993,
SouthTrust had consolidated total assets of $14.7 billion, which
ranked it as the largest bank holding company headquartered in
Alabama and one of the forty largest bank holding companies in
the United States. SouthTrust has no significant foreign operations.
The Company employs approximately 7,000 persons and considers
that its relations with these employees are good.
Banking Services
Commercial banking is SouthTrust's predominant business and its
subsidiary banks contribute substantially all of the total operating
revenues and total consolidated assets.
The subsidiary banks offer a broad range of banking services,
either directly or through other affiliated banks. Services to business
customers include providing checking and time deposit accounts, cash
management services, various types of lending and credit services,
corporate and other trust services and data processing. Through loan
participations, each of the subsidiary banks is able to offer credit to
businesses in its area up to the maximum limit available to the
combined subsidiary banks. Services provided to individual customers
directly or through other affiliated banks or corporations include
checking accounts, money market investment and money market checking
accounts, personal money management accounts, precious metals accounts,
NOW accounts, passbook savings accounts and various other time deposit
savings programs, loans (including business, personal, automobile,
mortgage, home improvements and education loans), discount brokerage
services, and a variety of trust services. Most of the subsidiary banks
offer Visa and/or Master Card multi-purpose nationally recognized
credit card services.
<PAGE> 3
Subsidiary Banks
At December 31, 1993, SouthTrust had 40 subsidiary banks with 396
banking offices, total assets of $14.7 billion, total loans of $9.4
billion, total deposits of $11.5 billion, and total stockholders' equity
of $1.1 billion. SouthTrust's lead bank is SouthTrust Bank of
Alabama, N.A. located in Birmingham, Alabama which at December 31, 1993
had 44 banking offices, total assets of $4.8 billion and total deposits
of $3.1 billion.
Since 1987, when interstate banking was first permitted in Alabama,
the Company has expanded into 5 other southeastern states within its
permitted operating region. The Company's largest operation outside of
Alabama is SouthTrust Bank of Georgia, N.A., which had approximately
$2.4 billion in assets, $2.0 billion in deposits and operated 85
banking offices in greater metropolitan Atlanta, Georgia area at
December 31, 1993. At December 31, 1993 approximately 61% of the
Company's bank assets were in Alabama, 17% were in Georgia, 15% were in
Florida, 4% were in North Carolina, 2% were in South Carolina and 1%
were in Tennessee.
Bank-Related Subsidiaries
The bank-related subsidiaries of SouthTrust are SouthTrust Mortgage
Corporation, a mortgage banking company servicing approximately $3.5
billion in mortgage loans for long-term investors; SouthTrust Data
Services, Inc., a computer service company; SouthTrust Life Insurance
Company, a credit life insurance company; SouthTrust Mobile Services,
Inc., a mobile home finance servicing company; SouthTrust Insurance
Agency, an insurance agency; SouthTrust Leasing, Inc., a leasing
company; SouthTrust Securities, Inc., an investment services company
and SouthTrust Estate & Trust Company, a trust company located in
Florida.
2
<PAGE> 4
Acquisitions
During 1993 the Company completed the following acquisitions:
<TABLE>
<CAPTION>
(In Millions)
- ----------------------------------------------------------------------------------------------------------------
Date Institution Assets Loans Deposits Locations
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Feb. 17 Prime Bancshares, Inc. ("Prime") $ 625.6 $335.9 $ 484.3 Atlanta, GA
May 7 Gulf Harbor Banks, Inc. ("Gulf Harbor") 39.7 24.3 32.8 Dunedin, FL
July 22 Federal Trust Bank - 1 branch 19.2 24.6 19.2 Amelia Island, FL
July 26 First Fed. Savings & Loan of Russell Co.- 1 br. 7.7 0.2 7.7 Abbeville, AL
Aug. 13 County Bancshares, Inc. ("County") 81.8 43.9 74.5 Troy, AL
Sept. 1 Central National Bank ("Central National") 42.0 21.9 38.6 Sarasota, FL
Sept. 24 First South Savings Bank - 1 branch 14.8 0.0 14.6 Columbia, SC
Nov. 6 First Federal Savings of Winder - 1 branch 13.5 0.2 13.4 Winder, GA
Nov. 22 Intercontinental Bank - 1 branch 19.0 12.5 17.1 Orlando, FL
Nov. 29 Commercial Bancorporation, Inc. ("Commercial") 73.0 50.9 64.6 Wesley Chapel, FL
Dec. 3 Anchor Savings - 2 branches 48.2 0.2 48.1 St. Augustine and
Fernandina Beach,FL
Dec. 10 Cypress Banks, Inc. ("Cypress") 112.6 82.4 96.6 Wesley Chapel, FL
Dec. 15 BMR Financial Group, Inc. ("BMR") 93.0 48.7 77.8 Winter Garden and
Clearwater, FL
Dec. 30 Gulf & Southern Fin. Corp. ("Gulf & Southern") 70.5 53.9 61.4 Ft. Myers, FL
- ----------------------------------------------------------------------------------------------------------------
TOTALS $1,260.6 $699.6 $1,050.7
================================================================================================================
</TABLE>
The acquisitions of the Federal Trust branch, First South Savings Bank, the
First Federal Savings and Loan branch, First Federal Savings of Winder, the
Intercontinental branch, and the Anchor Savings branches were accounted for as
purchases of assets and assumptions of liabilities. The acquisitions of all of
the outstanding shares of Prime, Gulf Harbor, Central National, Cypress, BMR,
and Gulf and Southern were accounted for as purchases. Under purchase
accounting, the results of operations of all of the above, subsequent to the
respective acquisition dates, are included in the Consolidated Financial
Statements.
Consideration given in all purchase transactions (including purchase and
assumption transactions) aggregated approximately $35.2 million in cash and
3,447,845 shares of SouthTrust Corporation Common Stock valued at $59.4
million. Total intangible assets recognized in these transactions were
approximately $35.0 million.
The acquisitions of County and Commercial were accounted for as
poolings-of-interests; however, the Company's previously reported consolidated
financial results have not been restated to include the effect of the
acquisitions prior to their respective acquisition dates, since the effect is
not material. In these transactions, approximately 1,140,762 shares of
SouthTrust Corporation common stock were exchanged for all outstanding shares
of County and Commercial.
The Company has entered into five separate definitive agreements and two
separate letters of intent to acquire financial institutions with aggregate
total assets of approximately $585 million. These pending acquisitions are
subject to shareholder and/or various regulatory approvals among other
conditions and are expected to close around mid-1994. The aggregate purchase
price of all pending acquisitions is approximately $21.1 million in cash and
approximately 1.6 million shares of SouthTrust Corporation common stock.
3
<PAGE> 5
Supervision and Regulation
SouthTrust is a bank holding company within the meaning of the Bank
Holding Company Act of 1956, as amended (the "Holding Company Act"),
and is registered as such with the Board of governors of the Federal
Reserve System (the "Board of Governors"). The Holding Company Act
prohibits, subject to certain exceptions, a bank holding company from
engaging in or acquiring direct or indirect control of more than 5% of
the voting stock of any company engaged in non-banking activities. An
exception to this prohibition is for activities expressly found by the
Board of Governors, by order of regulation, to be so closely related
to banking or managing or controlling banks as to be a proper incident
thereto. Some of the activities that the Board of Governors has
determined by regulation to be closely related to banking are servicing
loans, performing certain data processing services, acting as fiduciary
or investment or financial advisor, selling or underwriting insurance
coverage directly related to extensions of credit, mortgage banking and
the leasing of real and personal property.
As a bank holding company, SouthTrust is required to file with the
Board of Governors annual reports and such additional information as
the Board of Governors may require pursuant to the Act. The Board of
Governors may also make examinations of SouthTrust and each of its
subsidiaries.
Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the Federal Reserve Act on any extensions of
credit to the bank holding company or any of its other subsidiaries, or
investments in the stock or other securities thereof, and on the taking
of such stocks or securities as collateral for loans to any borrower.
Further, subsidiary banks are prohibited from engaging in certain tie-in
arrangements in connection with any extension of credit or lease or sale
of any property or furnishing of any service.
The principal source of SouthTrust's revenues is dividends from
subsidiary banks, and there are certain limitations on the payment of
dividends by the subsidiary banks. Of the 40 subsidiary banks of
SouthTrust 18 are national banks, 13 are Alabama state banks, 6 are
Florida state banks, 1 is a Tennessee state bank, 1 is a South
Carolina State bank, and 1 is a North Carolina State Bank. The
national banks are subject to supervision and regular examination by
the Comptroller of the Currency (the "Comptroller"); as members of the
Federal Deposit Insurance Corporation, they are subject to examination
and regulation by that body and are also subject to certain provisions
of the Federal Deposit Insurance Act. The dividend rule for national
4
<PAGE> 6
banks allows for dividends to be paid out of (i) a banks net profits
of that year plus (ii) its retained net profits from the preceding two
years, as adjusted. At year-end, a total of two years retained net
profits is used for this calculation. Prior approval from the
Comptroller is required before dividends in excess of this amount can
be paid. The Comptroller also has authority under the Financial
Institutions Supervisory Act to prohibit a national bank from engaging
in what, in the Comptroller's opinion, constitutes an unsafe or
unsound practice in conducting its business. It is possible,
depending upon the financial condition of the national bank in
question and other factors, that the Comptroller could claim that the
payment of dividends or other payments might under some circumstances
be such an unsafe or unsound practice. National bank stockholders are
also subject to pro rata assessment to cover any impairment of
capital, such assessment to be enforced by the sale, to the extent
necessary, of the stock of any stockholder failing to pay its
assessment.
The state bank subsidiaries of SouthTrust are subject to
supervision and regular examination by the Department of Banking in
their state of domicile. As members of the Federal Deposit Insurance
Corporation, they are subject to examination and regulation by that
body and are also subject to the provisions of the Federal Deposit
Insurance Act. Under the Alabama Banking Code, a state bank may not
declare or pay a dividend in excess of 90% of the net earnings of
such bank until the surplus of the bank is equal to at least 20% of
its capital, and thereafter the prior written approval of the
Superintendent of Banks is required if the total of all dividends
declared by the bank in any calendar year exceeds the total of its
net earnings for that year combined with its retained net earnings
for the preceding two years. No dividends, withdrawals or transfers
may be made from the bank's surplus without prior written approval of
the Superintendent of Banks.
Under the Florida Banking Code, a state bank may not declare
or pay a dividend in excess of 80% of the net earnings of such bank
until the surplus is equal to the amount of common stock. If the
amount of the surplus is equal to the amount of common stock, the
bank may pay out an amount equal to the current year plus prior two
years undistributed earnings.
Under South Carolina Banking Code, before a state chartered
bank can pay a dividend, approval must be obtained from the South
Carolina Commissioner of Banking.
Under the Tennessee Banking Code, a state bank may not declare
dividends in excess of 90% of the net earnings
5
<PAGE> 7
during the past year until the surplus is equal to the amount of
common stock.
Under the North Carolina Banking Code, a state chartered bank,
with common stock in excess of $15,000, may not declare a dividend
until the surplus is equal to at least 50% of the amount of common
stock.
Other areas subject to regulations by federal and state
authorities include reserves, investments, loans, mergers, issuance
of securities, establishment of branches and other aspects of
operation, including truth-in-lending and other lending and usury laws.
The Holding Company Act requires every bank holding company to
obtain prior approval of the Board of Governors before it can acquire
substantially all of the assets of any bank, or acquire voting shares
of any bank, if, after such acquisition, it would own or control,
directly or indirectly, more than 5% of the voting shares of such
bank. In no case, however, may the Board of Governors approve the
acquisition of substantially all the assets of any bank located
outside Alabama unless such acquisition is specifically authorized by
the laws of the state in which the bank to be acquired is located. In
recent years, various states have enacted statutes permitting regional
banking in the United States, and the Alabama Legislature has enacted
the Alabama Regional Reciprocal Banking Act of 1986, permitting a bank
or bank holding company located in Alabama to acquire a bank or bank
holding company in certain states that have adopted reciprocal
legislation and permitting banks or bank holding companies located in
such other states to acquire banks and bank holding companies located
in Alabama. The states specified in the Alabama Reciprocal Act that
have enacted statutes reciprocal with Alabama are Florida, Georgia,
Kentucky, Louisiana, Maryland, Mississippi, North Carolina, South
Carolina, Tennessee, Virginia and West Virginia as well as the
District of Columbia.
In addition Alabama banks and bank holding companies are
permitted to acquire banks or bank holding companies in states which
do not require reciprocity.
Recently, banking reform has been the topic of much
conversation and legislation in congress. In December 1991 Congress
passed the Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA"). Although this bill did not contain many of the
reform provisions proposed by the President and some congressional
leaders, FDICIA will have a significant impact on financial
institutions. FDICIA provides for reform of the deposit insurance
fund, establishing a risk-based insurance assessment system to be
implemented by 1994.
6
<PAGE> 8
FDICIA also establishes a new capital ranking system for financial
institutions, amends the rules governing the conversion of savings
institutions to commercial banks, and requires certain accounting and
regulatory reporting changes.
Since FDICIA did not contain many of proposed reforms, it is believed
that future legislation will be forthcoming to address such issues as
nation-wide banking; and granting of additional powers to banks and bank
holding company subsidiaries, such as expanded investment banking and
insurance activities.
Also at issue is the recapitalization of the Federal Deposit Insurance
Fund. FDICIA provided further guidance as to capital levels to be
maintained by insured depository institutions and corresponding
supervisory treatments. Under these guidelines, deposit insurance
premiums are accessed based on each banks capital adequacy ranking as
defined in the guidelines. At December 31, 1993, all of the Company's
bank subsidiaries are considered "well capitalized", the highest of the
five supervisory groupings.
Competition
The commercial banking business is highly competitive and SouthTrust's
subsidiary banks compete actively with national and state banks for
deposits, loans and trust accounts, and with savings and loan
associations and credit unions for deposits and loans. In addition,
SouthTrust's subsidiary banks compete with other financial institutions,
including securities brokers and dealers, personal loan companies,
insurance companies, finance companies, leasing companies and certain
governmental agencies, all of which actively engage in marketing various
types of loans, deposit accounts and other services.
7
<PAGE> 9
EXECUTIVE OFFICERS OF THE COMPANY
Positions Held With the Company
-------------------------------
<TABLE>
<CAPTION>
Executive
Officer of the
Name and Age Company Since
- ------------ --------------
<S> <C> <C>
Wallace D. Malone, Jr. Chairman and Chief Executive 1972
(57) Officer
Roy W. Gilbert, Jr. President, Director and 1972
(57) Chief Operating Officer
Frederick W. Murray, Jr. Executive Vice President 1980
(55)
James W. Rainer, Jr. Executive Vice President 1982
(51)
William R. Cranford Executive Vice President 1992 (1)
(48)
Aubrey D. Barnard Secretary, Treasurer and 1968
(57) Controller
Julian Banton Chairman, President and Chief 1982
(53) Executive Officer-SouthTrust
Bank of Alabama, N.A.
J. Michael Battle Executive Vice President 1992 (2)
(49) SouthTrust Bank of Alabama, N.A.
Fred C. Crum Executive Vice President 1986
(49) SouthTrust Bank of Alabama, N.A.
R. Glenn Eubanks Executive Vice President 1990 (3)
(45) SouthTrust Bank of Alabama, N.A.
William C. Patterson Executive Vice President 1979
(51) SouthTrust Bank of Alabama, N.A.
William E. Pearson Executive Vice President 1991 (4)
(44) SouthTrust Bank of Alabama, N.A.
C. Perry Relfe Executive Vice President 1981
(51) SouthTrust Bank of Alabama, N.A.
</TABLE>
8
<PAGE> 10
(1) Mr. Cranford was elected Executive Vice President in December
1992. For the five years prior to December 1992 Mr. Cranford
served as Chairman and Chief Executive Officer of SouthTrust
Bank of Etowah County, N.A.
(2) Mr. Battle was elected Executive Vice President in 1992.
From July 1990 to January 1992, Mr. Battle worked for Pacific
Southwest Bank, F.S.B., serving as President from September
1991 to January 1992, and Executive Vice President before
September 1991. From March 1989 to July 1990, Mr. Battle was
Chief Executive Officer of 7 bank subsidiaries of First
Interstate Bank - Texas.
(3) Mr. Eubanks was elected to Executive Vice President effective
July 1990. From May 1985 to July 1990 Mr. Eubanks held the
position of Senior Vice President of SouthTrust Bank of
Alabama, N.A.
(4) Mr. Pearson was elected to Executive Vice President effective
December 1991. From January 1986 to December 1991, Mr.
Pearson held the position of Senior Vice President of
SouthTrust Corporation.
Officers of the Company are re-elected annually at the
Board of Directors meeting immediately following the annual
stockholders' meeting held the third Wednesday in April of
each year.
There is no family relationship between any of the above
named officers.
Selected statistical data as required by this item is
included on pages 18 through 39, inclusive, of the Company's
annual report to stockholders for the year ended December 31,
1993, and is incorporated herein by reference.
Item 2 Properties
The Company's subsidiary banks and companies occupy various
offices throughout Alabama, Florida, Tennessee, Georgia, North
Carolina and South Carolina. Most of these are owned. Leased
properties constitute primarily land and buildings under long-term
leases in which subsidiary banks maintain offices.
Item 3 Legal Proceedings
Several of the Company's subsidiaries are defendants in various
legal proceedings arising in the normal course of business. These
claims relate to the lending and investment advisory services provided
by the Company and include alleged compensatory and punitive damages.
Although it is not possible to determine, with
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<PAGE> 11
any certainty, the potential exposure related to punitive
damages, in the opinion of Management, based upon consultation
with legal counsel, the ultimate resolution of these
proceedings will not have a material effect on the Company's
financial statements.
Item 4 Submission of Matters to a Vote of Security Holder
None
PART II
Item 5 Market for the Registrant's Common Equity and Related
Stockholder Matters
The information required by this item is contained on page 37
of the Company's annual report to stockholders for the year
ended December 31, 1993, and is incorporated herein by
reference.
Item 6 Selected Financial Data
Selected financial data required by this item is contained on
page 18 of the Company's annual report to stockholders for the
year ended December 31, 1993, and is incorporated herein by
reference.
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations
Information required by this item is contained on: pages 18
through 39, inclusive, of the Company's annual report to
stockholders for the year ended December 31, 1993, and is
incorporated herein by reference.
Item 8 Financial Statements and Supplementary Data
Consolidated financial statements and notes required by this
item are contained on pages 40 through 56, inclusive, of the
Company's annual report to stockholders for the year ended
December 31, 1993, and are incorporated herein by reference.
Selected quarterly financial data required by this item is
contained on page 36 of the Company's annual report to
stockholders for the year ended December 31, 1993, and is
incorporated herein by reference.
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
NONE
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<PAGE> 12
PART III
Item 10 Directors and Executive Officers of the Registrant
Information concerning the Company's directors is contained on pages 2
through 4, inclusive, of the Company's proxy statement for the annual
meeting of stockholders, April 20, 1994 and is incorporated herein by
reference.
Information concerning the Company's executive officers is contained
herein in response to Item I of Part I.
Item 11 Executive Compensation
Information relating to executive compensation is contained on pages 7
through 14, inclusive, of the Company's proxy statement for the annual
meeting of stockholders, April 20, 1994 and is incorporated herein by
reference.
Item 12 Security Ownership of Certain Beneficial Owners and Management
Information required by this item is contained on pages 2 through 4,
inclusive, of the Company's proxy statement for the annual meeting of
stockholders, April 20, 1994, and is incorporated herein by reference.
Item 13 Certain Relationships and Related Transactions
Information relating to this item is contained on page 14 of the
Company's proxy statement for the annual meeting of stockholders,
April 20, 1994, and is incorporated herein by reference.
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<PAGE> 13
PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports On Form 8-K
(a)(1) and (2) The response to this portion of item 14 is submitted
as a separate section of this report.
(3) Exhibits:
No. (3) Restated Certificate of Incorporation and Restated
By-Laws (incorporated herein by reference to Exhibits
4(a) and 4(b) of Registration Statement No. 2-84167).
No. (4) SouthTrust Corporation Shareholders' Rights Agreement.
(Incorporated herein by reference from Registration
Statement No. 1-3613).
No. (11) Statement of Computation of Earnings Per Share.
No. (12) Statement of Computation of Ratios.
No. (13) Annual Report to Stockholders for the year ended
December 31, 1993.
No. (21) Subsidiaries of the Registrant.
No. (23) Consents of Experts and Counsel.
No. (24) Powers of Attorney.
No. (99) (2) Undertaking Regarding Registration Statement on
Form S-8.
(b) Reports on Form 8-K filed in the fourth quarter of 1993. None.
(c) Exhibits - The response to this portion of Item 14 is submitted
as a separate section of this report.
(d) Financial Statements Schedules: None
12
<PAGE> 14
S I G N A T U R E S
Pursuant to the requirements of Section 13 and 13(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SOUTHTRUST CORPORATION
Date: March 9, 1994
-------------
/s/ Wallace D. Malone, Jr.
--------------------------
Wallace D. Malone, Jr.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Wallace D. Malone, Jr. Chairman, Chief Executive March 9, 1994
- --------------------------- Officer, Director
Wallace D. Malone, Jr.
/s/ Roy W. Gilbert, Jr. President, Chief March 9, 1994
- --------------------------- Operating Officer,
Roy W. Gilbert, Jr. Director
/s/ Aubrey D. Barnard Secretary, Treasurer and March 9, 1994
- --------------------------- Controller (Principal
Aubrey D. Barnard Accounting and Financial
Officer)
* Director March 9, 1994
- ---------------------------
Herbert Stockham
* Director March 9, 1994
- ---------------------------
Bill L. Harbert
* Director March 9, 1994
- ---------------------------
T.W. Mitchell
</TABLE>
13
<PAGE> 15
<TABLE>
<S> <C> <C>
* Director March 9, 1994
- ----------------------------
William C. Hulsey
* Director March 9, 1994
- ----------------------------
John M. Bradford
* Director March 9, 1994
- ----------------------------
Wm. Kendrick Upchurch, Jr.
* Director March 9, 1994
- ----------------------------
Charles G. Taylor
* Director March 9, 1994
- ----------------------------
Allen J. Keesler, Jr.
/s/ William L. Prater
- ---------------------------
William L. Prater
Attorney-in-fact
</TABLE>
14
<PAGE> 16
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (2) and ITEM 14(d)
LIST OF FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1993
SOUTHTRUST CORPORATION
BIRMINGHAM, ALABAMA
15
<PAGE> 17
FORM 10-K ITEM 14(a)(1) and (2)
SOUTHTRUST CORPORATION AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS
Item 14(a) 1 The following consolidated financial statements of SouthTrust
Corporation and subsidiaries, included in the annual report of
the Company to its stockholders for the year ended December
31, 1993 are incorporated herein by reference in Item 8:
Consolidated Statements of Condition - December 31, 1993
and December 31, 1992
Consolidated Statements of Income - Years ended December 31,
1993, 1992, and 1991
Consolidated Statements of Cash Flows - Years ended
December 31, 1993, 1992, and 1991
Consolidated Statements of Shareholder's Equity
- Years ended December 31, 1993, 1992, and 1991
Notes to Consolidated Financial Statements - Three years
ended December 31, 1993
Report of Independent Public Accountants
Item 14(a) 2 All schedules to the consolidated financial statements
required by Article 9 of Regulation S-X are omitted since they
are either not applicable or the required information is shown
in the consolidated financial statements or notes thereto.
16
<PAGE> 1
Exhibit No. 11
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED
(In thousands) DECEMBER 31, 1993
-----------------------
EARNINGS
SHARES PER SHARE
-------- ----------
<S> <C> <C>
Weighted average shares outstanding 77,227 $1.95
====== =====
Primary
Average shares outstanding 77,227
Common stock equivalents 545
------
77,772 $1.94
====== =====
Fully Diluted
Average shares outstanding 77,227
Common stock equivalents 806
------
78,033 $1.93
====== =====
</TABLE>
<PAGE> 1
Exhibit No. 12
STATEMENT OF COMPUTATION OF RATIOS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Earnings to fixed Charges
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Earnings:
Income before income taxes $224,527 $164,892 $123,315 $90,068 $ 91,850
Plus:
Fixed charges 404,360 388,901 479,405 502,764 454,006
Less:
Capitalized interest (82) (201) (591) (949) (855)
--------- --------- --------- --------- ---------
Earnings, including interest on deposits (A) $628,805 $553,592 $602,129 $591,883 $545,001
Less:
Interest on deposits (335,708) (337,878) (413,880) (411,560) (370,216)
--------- --------- --------- --------- ---------
Earnings, excluding interest on deposits (B) $293,097 $215,714 $188,249 $180,323 $174,785
--------- --------- --------- --------- ---------
Fixed Charges:
Interest expense $397,743 $382,930 $474,453 $498,329 $450,147
Capitalized interest 82 201 591 949 855
Amortization of debt expense 195 63 0 43 38
Interest portion of rent expense 6,340 5,707 4,361 3,443 2,966
--------- --------- --------- --------- ---------
Total Fixed Charges (C) $404,360 $ 388,901 $479,405 $502,764 $454,006
Less:
Interest on deposits (335,708) (337,878) (413,880) (411,560) (370,216)
--------- --------- --------- --------- ---------
Total Fixed Charges excluding
interest expense on deposits (D) $ 68,652 $ 51,023 $ 65,525 $ 91,204 $ 83,790
========= ========= ======== ======== ========
Earnings to fixed charges:
Including interest on deposits (A/C) 1.56 1.42 1.26 1.18 1.20
==== ==== ==== ==== ====
Excluding interest on deposits (B/D) 4.27 4.23 2.87 1.98 2.09
==== ==== ==== ==== ====
</TABLE>
<PAGE> 1
EXHIBIT 13
FINANCIAL INFORMATION
SouthTrust Corporation
The financial statements and related information herein were prepared by the
Company and were based on generally accepted accounting principles,
appropriate in the circumstances to reflect in all material respects the
financial condition of the Company at December 31, 1993 and 1992 and the
results of operations and cash flows for the three years ended December 31,
1993. The financial statements reflect management's best estimates and
judgments. Financial information presented elsewhere in this report has been
prepared in a manner consistent with financial statement disclosures.
Management is responsible for the reliability and integrity of these
statements. In meeting this responsibility, management maintains an accounting
system and related controls to provide reasonable assurance that the financial
records are reliable for preparing financial statements and maintaining
accountability for assets. The Company's systems and controls are also
designed to provide reasonable assurance that assets are safeguarded and that
transactions are executed in accordance with management's authorizations and
recorded properly. The systems and controls and compliance therewith are
reviewed periodically by internal auditors.
The Board of Directors has appointed an Audit Committee composed of
directors who are not officers or employees of the Company. The Committee
meets periodically with management, internal auditors and independent public
accountants.
Arthur Andersen & Co., independent public accountants, has audited the
financial statements in accordance with generally accepted auditing standards
and their report appears herein.
CONTENTS
Management's Discussion and Analysis 18
Consolidated Financial Statements 40
Notes to Consolidated Financial Statements 44
Report of Independent Public Accountants 57
17
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
SouthTrust Corporation
SELECTED FINANCIAL INFORMATION
(TABLE 1)
<TABLE>
<CAPTION>
Year Ended December 31 1993 1992 1991 1990 1989 1988
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SELECTED RATIOS:
Return on average total assets 1.10% 1.04% 0.96% 0.85% 1.03% 1.08%
Return on average common
stockholders' equity 15.84 15.66 15.21 13.29 15.44 16.12
Dividend pay-out ratio 30.70 31.29 33.59 40.66 35.16 32.96
Average equity to average assets 6.96 6.62 6.29 6.37 6.66 6.73
Non-interest expense as a percent
of average total assets 3.19 3.39 3.15 2.85 2.83 2.87
- ----------------------------------------------------------------------------------------------------------------------------------
INTEREST YIELDS/RATES:
Taxable equivalent yields earned
on earning assets 7.52% 8.40% 9.84% 10.66% 11.04% 10.26%
Average rate paid on
interest-bearing liabilities 3.64 4.33 6.19 7.51 8.06 7.06
Net interest spread 3.88 4.07 3.65 3.15 2.98 3.20
Net interest margin 4.35 4.61 4.32 4.03 4.06 4.21
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA:
Net income $ 1.94 $ 1.66 $ 1.42 $ 1.14 $ 1.21 $ 1.14
Cash dividends declared 0.60 0.52 0.48 0.46 0.43 0.37
Stockholders' equity at period end 13.25 11.55 10.05 8.99 8.31 7.20
Stock price range (low) 16 5/8 14 1/8 6 5/8 5 3/4 8 3/4 7 3/8
(high) 22 1/8 18 1/8 17 1/4 10 3/8 11 1/4 9 3/8
- ----------------------------------------------------------------------------------------------------------------------------------
SHARE DATA:
Average shares outstanding (000s) 77,772 68,948 63,255 61,148 60,077 59,333
Shares outstanding
at end of year (000s) 79,401 74,477 65,837 61,167 61,013 59,522
- ----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM PERFORMANCE:
Five-year compound growth rates for:
Period ending December 31, 1993:
Net income 17.37%
Net income per share 11.22
Dividends declared per share 10.15
Period ended December 31, 1993:
Total assets 17.22%
Loans 18.31
Deposits 17.60
Stockholders' equity 18.73
Stockholders' equity per share 12.97
</TABLE>
18
<PAGE> 3
EARNINGS SUMMARY
THREE YEARS ENDED DECEMBER 31, 1993
SouthTrust Corporation ("SouthTrust") reported net income of $150.5 million or
$1.94 per share for the year ended December 31, 1993, compared to net income of
$114.2 million or $1.66 per share for the year ended December 31, 1992. Net
income in 1991 was $90.0 million or $1.42 per share.
The increase in net income in 1993 over 1992 was primarily attributable to
growth in average earning assets, which increased 25% over 1992. This increase
was offset by the decline in the fully taxable equivalent net interest margin,
which decreased to 4.35% in 1993 from 4.61% in 1992, as market interest rates
continued to decline and maturing earning assets were replaced with
lower-yielding earning assets.
Net earnings in 1993 resulted in a return on average assets of 1.10%
compared to 1.04% during 1992, and a return on average stockholders' equity of
15.84% compared to 15.66% during 1992.
NET INTEREST INCOME
Net interest income is the difference between interest income and interest
expense and is the major component of net income of the Company. Net interest
income is affected by changes in the volume of interest-earning assets and
interest-bearing liabilities, and the rates earned/paid thereon, respectively.
For purposes of this discussion, income that is either exempt from federal
income taxes or is taxed at a preferential rate has been adjusted to fully
taxable equivalent amounts, using a statutory federal tax rate of 35% in 1993
and 34% in 1992 and 1991.
Net interest income increased 18% to $547.5 million from $464.8 million
in 1992 and $371.8 million in 1991. The taxable equivalent net interest margins
for the three years ended December 31, 1993, were 4.35%, 4.61% and 4.32%,
respectively. The net interest spread between interest-earning assets and
interest-bearing liabilities decreased 19 basis points to 3.88% in 1993 from
4.07% in 1992. The net interest spread in 1991 was 3.65%. The net interest
spread is affected by competitive pressures, Federal Reserve Bank monetary
policies and the composition of interest-earning assets and interest-bearing
liabilities.
Interest income increased $97.5 million to $945.2 million from $847.7
million in 1992, compared to $846.2 million in 1991. The increase in interest
income during 1993 was attributable to an increase in the volume of average
interest-earning assets of 25% to $12.6 billion during 1993. This increase was
partially offset by a decrease in the yield on average interest-earning assets
of 88 basis points to 7.52% in 1993 from 8.40% in 1992. An increase in the
volume of interest-earning assets of 16% was also responsible for the increase
of $1.4 million in interest income from 1991 to 1992. The yield on
interest-earning assets decreased 144 basis points from 9.84% in 1991 to 8.40%
in 1992.
The mix of interest-earning assets shifted slightly during 1993.
Increased loan demand and in-market acquisitions of banks pushed loans to
approximately 67.0% of average earning assets in 1993 compared to approximately
64.1% in 1992. The effect of this loan growth was curbed by a decline in the
average yield on loans, which decreased to 7.99% during 1993 from 8.75% during
1992. Interest income on loans increased $107.4 million to $672.9 million in
1993. The increase of loans relative to other interest-earning assets had the
effect of increasing total interest income due to the higher yields on loans as
compared to other interest-earning assets. During 1993, average loans increased
30% to $8.4 billion from $6.5 billion in 1992. Short-term investments were
approximately 2.2% of average earning assets in 1993 and produced an average
yield of 5.04%. During 1992 short-term investments accounted for approximately
2.5% of average earning assets and produced an average yield of 5.74%. Interest
income on short-term investments decreased $0.3 million to $14.1 million in
1993.
Securities which accounted for approximately 33.4% of average earning
assets in 1992 accounted for approximately 30.8% of average earning assets
during 1993 and produced an average yield of 6.66% in 1993 and 7.94% in 1992.
Interest income on securities decreased $9.5 million to $258.3 million. The net
decrease in securities income was the result of an increase in the average
level of securities, which produced $33.2 million of additional interest
income, offset by lower yields on securities, which resulted in a $42.7 million
reduction in interest income. The decrease in yield on investment securities
was affected by the maturing of $2,174.3 million of securities during 1993,
with the proceeds being reinvested at lower rates. During 1993 the Company
primarily acquired short-term securities, which resulted in relatively low
yields. This decision was part of an overall asset-liability management
strategy in response to current market interest rates. Table 12, Interest
Rate Sensitivity Analysis, provides a maturity analysis of interest-earning
assets and interest-bearing liabilities.
Interest expense increased $14.8 million or 4% to $397.7 million in
1993. This compares to a decrease of $91.6 million or 19% to $382.9 million in
1992 from $474.5 million in 1991. Due to declining market interest rates, the
average rate paid on interest-bearing liabilities continued to fall in 1993,
decreasing 69 basis points to 3.64% from 4.33% in 1992, only partially
offsetting the increase in interest expense attributable to continued growth
in the average volume of interest-bearing liabilities. The average rate paid
in interest-bearing liabilities in 1991 was 6.19%. During 1993, the volume of
average interest-bearing liabilities increased $2.1 billion or 24% to $10.9
billion. This compared to 1992 growth in volume of $1.2 billion or 15%.
19
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SouthTrust Corporation
AVERAGE BALANCES AND INTEREST RATES, INTEREST YIELD/RATES
ON FULLY TAXABLE EQUIVALENT BASIS
(TABLE 2)
The following table details average balances of interest-earning assets and
interest-bearing liabilities, the fully taxable equivalent amount of interest
earned/paid thereon, and the fully taxable equivalent yield/rate for the three
years ended December 31, 1993. The loan averages include loans on which the
accrual of interest has been discontinued. Income on certain non-accrual loans
is recognized on a cash basis.
<TABLE>
<CAPTION>
ASSETS 1993 1992 1991
---------------------------- -------------------------------- ------------------------------
(Average in Millions; Average Yield/ Average Yield/ Average Yield/
Interest in Thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans, net of
unearned income $ 8,422.0 $672,888 7.99% $ 6,466.7 $565,517 8.75% $5,718.0 $586,883 10.26%
Investment securities:
Taxable 3,498.8 217,983 6.23 2,969.9 222,135 7.48 2,245.3 193,776 8.63
Non-taxable 376.3 40,288 10.71 402.8 45,652 11.33 434.7 50,666 11.65
Short-term investments 279.1 14,066 5.04 250.7 14,385 5.74 202.0 14,935 7.39
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-
earning assets 12,576.2 945,225 7.52 10,090.1 847,689 8.40 8,600.0 846,260 9.84
Allowance for loan losses (118.1) (90.7) (75.5)
Other assets 1,194.9 1,028.8 887.2
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $13,653.0 $11,028.2 $9,411.7
==================================================================================================================================
LIABILITIES AND
STOCKHOLDERS' EQUITY
Savings deposits $ 683.2 $ 17,221 2.52% $ 531.5 $ 16,465 3.10% $ 399.0 $ 18,392 4.61%
Interest-bearing
demand deposits 1,299.3 27,852 2.14 1,013.3 28,700 2.83 711.4 32,124 4.52
Time deposits 7,184.1 290,635 4.05 6,158.2 292,714 4.75 5,538.4 363,364 6.56
Short-term borrowings 1,340.0 41,014 3.06 925.5 31,418 3.39 868.7 49,133 5.66
Long-term debt 415.2 21,021 5.06 206.9 13,634 6.59 142.9 11,440 8.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities 10,921.8 397,743 3.64 8,835.4 382,931 4.33 7,660.4 474,453 6.19
Demand deposits
non-interest bearing 1,606.0 1,293.1 997.6
Other liabilities 174.8 170.1 161.9
- ------------------------------------------------------------------------------------------------------------------------------------
12,702.6 10,298.6 8,819.9
Stockholders' equity 950.4 729.6 591.8
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $13,653.0 $11,028.2 $9,411.7
====================================================================================================================================
Net interest income $547,482 $464,758 $371,807
====================================================================================================================================
Net interest margin 4.35% 4.61% 4.32%
Net interest spread 3.88 4.07 3.65
</TABLE>
<TABLE>
<CAPTION>
TAXABLE EQUIVALENT
ADJUSTMENT ANALYSIS 1993 1992 1991
------------------------------------------------------------------------------------------
Taxable Interest Taxable Interest Taxable Interest
Interest Equivalent Income Interest Equivalent Income Interest Equivalent Income
(In Thousands) Income Adjustments (FTE) Income Adjustments (FTE) Income Adjustments (FTE)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans $669,495 $ 3,393 $672,888 $561,757 $ 3,760 $565,517 $581,839 $ 5,044 $586,883
Investment securities:
Taxable 217,555 428 217,983 221,692 443 222,135 193,297 479 193,776
Non-taxable 26,435 13,853 40,288 30,246 15,406 45,652 33,654 17,012 50,666
Short-term investments 14,066 0 14,066 14,385 0 14,385 14,935 0 14,935
- ------------------------------------------------------------------------------------------------------------------------------------
Totals $927,551 $17,674 $945,225 $828,080 $19,609 $847,689 $823,725 $22,535 $846,260
====================================================================================================================================
</TABLE>
20
<PAGE> 5
VOLUME-RATE ANALYSIS
(TABLE 3)
The following table shows a summary of the changes in interest income and
interest expense on a fully taxable equivalent basis resulting from changes in
volume and changes in rates for each category of interest-earning assets and
interest-bearing liabilities for 1993/1992 and 1992/1991. Changes not solely
attributable to a change in rate or volume are allocated proportionately
relative to the absolute total change of rate and volume.
<TABLE>
<CAPTION>
1993 versus 1992 1992 versus 1991
Increase (decrease) due to change in: Increase (decrease) due to change in:
Volume Yield/ Volume Yield/
(In Thousands) Outstanding Rate Total Outstanding Rate Total
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income on:
Loans $159,504 ($52,134) $107,370 $ 71,506 ($ 92,871) ($21,365)
Investment securities:
Taxable 36,153 (40,305) (4,152) 56,634 (28,275) 28,359
Non-taxable (2,914) (2,449) (5,363) (3,643) (1,372) (5,015)
Short-term investments 1,532 (1,851) (319) 3,182 (3,732) (550)
- --------------------------------------------------------------------------------------------------------------
Total interest income 194,275 (96,739) 97,536 127,679 (126,250) 1,429
Interest expense on:
Interest-bearing deposits 58,531 (60,701) (2,170) 58,852 (134,853) (76,001)
Short-term borrowings 12,936 (3,340) 9,596 3,034 (20,749) (17,715)
Long-term debt 11,138 (3,751) 7,387 4,473 (2,279) 2,194
- --------------------------------------------------------------------------------------------------------------
Total interest expense 82,605 (67,792) 14,813 66,359 (157,881) (91,522)
- --------------------------------------------------------------------------------------------------------------
Net interest income $111,670 ($28,947) $ 82,723 $ 61,320 $ 31,631 $92,951
==============================================================================================================
</TABLE>
PROVISION FOR LOAN LOSSES
The provision for loan losses in 1993 was $45.0 million, compared to $43.3
million in 1992 and $38.0 million in 1991. Table 8, Allowances for Loan Losses,
summarizes information concerning the allowance for loan losses for the five
years ended December 31, 1993.
The provision for loan losses in 1993 remained relatively consistent with
1992 increasing only $1.7 million or 4%. During 1993, net charge-offs were
$24.6 million or 0.29% of average loans, down $6.9 million from $31.5 million
or 0.49% of average loans in 1992. Net charge-offs during 1991 were $31.7
million or 0.55% of average loans. Maintenance of the provision near the level
of the provision in 1992, despite the improved credit quality indicators was
due to loan growth during 1993. At December 31, 1993, total non-performing
loans declined to $67.4 million, and consisted of loans on non-accrual status
of $58.6 million and restructured loans of $8.8 million. Total non-performing
loans at December 31, 1992 and 1991 were $72.3 million and $74.3 million,
respectively. For 1993, total non-performing loans consisted of construction
loans of $1.4 million, one-four family residential mortgage loans of $7.2
million, commercial real estate mortgage loans of $35.1 million, commercial,
financial and agricultural loans of $21.1 million and loans to individuals of
$2.6 million. Accruing loans 90 days or more past due increased $2.1 million to
$13.2 million in 1993 from $11.1 million in 1992, compared to $12.0 million in
1991. Management considers such factors as economic conditions, analysis of
individual loans, and overall portfolio characteristics and delinquencies in
determining the provision for loan losses.
For further discussion on non-performing loans and total non-performing
assets, see Management's discussion of loans.
21
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SouthTrust Corporation
NON-INTEREST INCOME
Total non-interest income increased $38.0 million or 28% to $174.7 million.
Service charges on deposit accounts accounted for the largest portion of the
increase in non-interest income, increasing $12.8 million or 20% to $76.7
million due to an increase in the number of deposit accounts and an increase in
certain service charge rates. Mortgage origination and servicing fees increased
$11.0 million or 48% to $33.8 million. The increase in mortgage origination and
servicing fees is largely attributable to increased mortgage origination fees
as a result of historically low mortgage interest rates, which prompted
significant refinancing activity, as well as new loan activity. During 1993,
mortgage origination fees were approximately $17.7 million compared to $10.0
million in 1992. Most mortgage origination fees are realized during the period
the loans are originated since the majority of such loans are sold to
third-party investors. Loan servicing income increased $3.3 million to $16.1
million during 1993, as total mortgage loans serviced increased to $3.5 billion
on approximately 50,600 loans in 1993 from $2.6 billion on 41,200 loans in
1992. The increase in mortgage loans serviced was partially due to the $336
million of loans added to the servicing portfolio as a result of the
acquisition of Prime Bancshares, Inc. ("Prime"). Mortgage originations are
highly sensitive to interest rates and general economic conditions. Stabilizing
or increasing mortgage interest rates could result in decreased demand, and in
turn lower mortgage origination fee income. Trust fees increased $3.3 million
to $15.2 million. Securities gains were $0.6 million in 1993 and 1992. Other
fee income including bank card fees, investment fees, and other fees increased
$8.5 million or 29% to $37.7 million, and other non-interest income increased
$2.4 million or 31% to $10.7 million due to an increased level of activity
throughout the Company. For the year ended December 31, 1992, total
non-interest income increased $27.8 million or 26% over the 1991 level of
$108.9 million. There were no significant non-recurring non-interest income
items recorded during 1993, 1992 or 1991.
NON-INTEREST INCOME
(TABLE 4)
The following table presents an analysis of non-interest income for 1993, 1992
and 1991 together with the amount and percent change from the prior year for
1993 and 1992:
<TABLE>
<CAPTION>
Change from Prior Year
Year Ended December 31 1993 1992
-------------------------------------------------------------------------
(In Millions) 1993 1992 1991 Amount % Amount %
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Service charges on
deposit accounts $ 76.7 $ 63.9 $ 49.4 $12.8 20.0% $14.5 29.4%
Mortgage origination and
servicing fees 33.8 22.8 17.4 11.0 48.2 5.4 30.8
Trust fees 15.2 11.9 9.8 3.3 27.5 2.1 21.6
Securities gains 0.6 0.6 0.7 - - (0.1) (6.8)
Bank card fees 12.6 9.7 7.7 2.9 30.1 2.0 25.1
Investment fees 11.3 8.8 7.0 2.5 28.5 1.8 25.9
International fees 4.8 4.5 4.0 0.3 8.1 0.5 13.1
Safe deposit fees 2.9 2.6 2.1 0.3 12.4 0.5 24.4
Collection fees 2.4 2.1 1.7 0.3 11.5 0.4 20.8
Cash management fees 1.7 1.3 0.7 0.4 26.4 0.6 82.2
Other fees 2.0 0.2 0.5 1.8 849.5 (0.3) (57.6)
Other 10.7 8.3 7.9 2.4 30.5 0.4 5.0
- --------------------------------------------------------------------------------------------------------------
Totals $174.7 $136.7 $108.9 $38.0 27.8 $27.8 25.5
==============================================================================================================
</TABLE>
22
<PAGE> 7
NON-INTEREST EXPENSE
Total non-interest expense increased $61.4 million or 16% to $435.0 million
from $373.6 million. Total non-interest expense in 1991 was $296.8 million. The
1993 ratio of non-interest expense to average total assets of 3.19% compared
favorably to the 1992 level of 3.39%. This result is attributable to
Management's commitment to continuously improve the Company's overall operating
efficiency.
Salaries and employee benefits account for the largest portion of
non-interest expense and the largest portion of the increase during all three
years. During 1993, salaries and employee benefits were $227.0 million, an
increase of $42.1 million or 23% over 1992, as the number of full-time
equivalent employees increased approximately 11% to approximately 7,000
employees at December 31, 1993, which has been largely due to continued
expansion through acquisitions. Net occupancy expense increased $4.5 million or
14% to $36.8 million as the number of branches increased 10% to 396 at December
31, 1993, from 360 at December 31, 1992. Equipment expense increased $4.7
million or 23% to $25.4 million in 1993. During 1993, FDIC insurance expense
increased $3.9 million or 20% to $23.5 million as a result of increased
deposits of 14% from 1992 to 1993. All other non-interest expense items
increased $6.2 million or 5% to $122.3 million for 1993, primarily as a result
of growth in the general level of business throughout the Company. There were
no significant non-recurring non-interest expense items recorded during any of
the three years in the period ended December 31, 1993.
NON-INTEREST EXPENSE
(TABLE 5)
The following table presents an analysis of non-interest expense for 1993, 1992
and 1991 together with the amount and percent change from the prior year for
1993 and 1992:
<TABLE>
<CAPTION>
Change from Prior Year
Year Ended December 31 1993 1992
-------------------------- ------------------------------------------
(In Millions) 1993 1992 1991 Amount % Amount %
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries and employee benefits $227.0 $184.9 $149.5 $42.1 22.8% $35.4 23.7%
Net occupancy expense 36.8 32.3 25.3 4.5 14.0 7.0 27.6
Equipment expense 25.4 20.7 16.8 4.7 22.6 3.9 23.0
Professional services 25.4 18.9 14.8 6.5 34.4 4.1 27.7
FDIC insurance 23.5 19.6 15.1 3.9 19.7 4.5 30.0
Communications 20.0 18.1 16.8 1.9 10.7 1.3 7.8
Business development 12.8 10.8 9.4 2.0 18.8 1.4 14.3
Supplies 9.9 9.6 8.7 0.3 3.2 0.9 10.0
Other insurance 8.3 6.6 5.8 1.7 26.4 0.8 14.7
Data processing 6.0 7.2 6.4 (1.2) (16.6) 0.8 13.3
Other 39.9 44.9 28.2 (5.0) (11.5) 16.7 59.3
- ---------------------------------------------------------------------------------------------------------------
Totals $435.0 $373.6 $296.8 $61.4 16.4 $76.8 25.9
===============================================================================================================
</TABLE>
INCOME TAXES
Effective January 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes,"
which changes the method of accounting for income taxes from the deferred
method to the asset and liability method. Under this method, deferred tax
assets and liabilities are determined based on the difference between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
The cumulative effect of the change in accounting method and the current year
impact of the change in the income tax provision were not material. Prior to
adoption of SFAS 109, the Company accounted for income taxes under APB 11.
Income tax expense increased $23.3 million or 46% to $74.0 million for the
year ended December 31, 1993, resulting in an effective tax rate of 33%
compared to 31% and 27% in 1992 and 1991, respectively. The statutory federal
tax rate was 35% during 1993 and 34% during 1992 and 1991.
A reconciliation of the difference between income tax expense and income
taxes calculated by applying the statutory federal tax rate is provided in Note
K of the Consolidated Financial Statements. The largest component of this
difference during all three years is attributable to tax-exempt interest
income. Certain provisions of the Tax Reform Act of 1986 have had an effect of
increasing the effective income tax rate paid by the Company. The primary
provision affecting the Company is the 100% disallowance of interest expense
deemed attributable to debt used to carry certain tax exempt obligations
acquired after August 6, 1986, and changes in the taxable portion of certain
other investments. Under current tax laws, the trend of an increasing effective
tax rate is likely to continue.
23
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SouthTrust Corporation
BALANCE SHEET SUMMARY
Total assets at December 31, 1993, were $14.7 billion, representing an
increase of 16% over the 1992 level of $12.7 billion. Average total assets
increased 24% to $13.7 billion during 1993 from $11.0 billion in 1992. The
five-year compound growth rate in total assets and average total assets of the
Company are 17% and 17%, respectively.
During 1993, the Company consummated 14 business combinations in which the
Company acquired additional assets of $1,260.6 million, including loans of
$699.6 million, and assumed $1,050.7 million in deposits. During 1992, the
Company acquired $1,489.4 million in assets, including $871.2 million in loans,
and assumed $1,355.5 million in deposits. Note B - Business Combinations, of
the Consolidated Financial Statements, included elsewhere in this report,
provides additional information regarding business combinations. In the normal
course of business, the Company regularly investigates acquisition and
expansion opportunities, and expects this process will continue.
Average earning assets during 1993 were $12.6 billion up $2.5 billion or
25% from 1992. Average earning assets were 92.1% of average total assets in
1993 and 91.5% in 1992.
Average interest-bearing liabilities accounted for 80.0% of average
liabilities and stockholders' equity in 1993 and 80.1% in 1992.
Table 2, Average Balances and Interest Rates, includes average balances of
assets and liabilities and stockholders' equity, and the rates earned/paid on
major categories of earning assets and interest-bearing liabilities for each
of the three years in the period ended December 31, 1993.
LOANS
Loans comprise the major portion of earning assets of the Company,
accounting for 67.0% and 64.1% of average earning assets in 1993 and 1992,
respectively. At December 31, 1993, loans, net of unearned income, totaled
$9,448.3 million, up 25% from the December 31, 1992, level of $7,546.6 million.
Of the total increase of $1,901.7 million from 1992 to 1993, $699.6 million
represent loans obtained in acquisitions.
The largest portion of the increase in total loans was attributable to an
increase in residential real estate mortgage loans, which increased $585.5
million to $2,322.1 million or 24.4% of total loans at December 31, 1993. The
increase in residential real estate mortgage loans reflects increased borrowing
and refinancing activity as a result of low interest rates. The Company also
expanded its mortgage production capabilities with acquisitions of other
financial institutions, particularly with the December 1992 acquisition of CK
Federal Savings & Loan, serving the greater Charlotte, North Carolina market
and the February 1993 acquisition of Prime Bancshares, Inc., located in
Atlanta, Georgia. Of the total increase in residential real estate mortgage
loans, $310.7 million were obtained through acquisitions.
Commercial real estate mortgage loans increased $567.9 million or 28%
to $2,594.5 million or 27.2% of total loans at December 31, 1993. $167.1
million of this increase represented loans obtained through acquisitions, the
majority of which were secured by properties located in Florida and Georgia. Of
the total increase in commercial real estate mortgage loans, approximately
$63.3 million of the properties securing the loans were located in Alabama,
$187.2 million were located in Florida, and $139.3 million were located in
Georgia. The remaining $178.1 million were dispersed throughout other states,
primarily in the southeastern portion of the country. Commercial real estate
loans represents the Company's largest credit concentration and includes all
real estate mortgage loans except residential mortgage loans. Of the total
commercial real estate mortgage loans, approximately $1,343.5 million or 52% of
the properties are owner-occupied business premises for commercial or
service-related businesses, while approximately $1,251.0 million or 48% are
secured by income-producing properties. Of the income-producing properties,
approximately 28% are located in Alabama, approximately 23% are located in
Florida, and the remainder of the properties are dispersed throughout other
states, primarily in the Southeast. There were no significant industry
concentrations within the commercial real estate mortgage portfolio.
Real estate construction loans increased $116.1 million or 35% to $448.6
million or 4.7% of total loans at December 31, 1993, from $332.5 million or
4.4% of total loans at December 31, 1992, primarily due to the $71.4 million in
real estate construction loans obtained through acquisitions.
Commercial, financial and agricultural loans increased $436.1 million to
$2,814.1 million or 29.5% of total loans at December 31, 1993, compared to
$2,378.0 million or 31.2% of total loans at year-end 1992. The growth was due
primarily to increased loan demand brought about by relatively low interest
rates, and growth in new markets. Of the total increase in commercial,
financial and agricultural loans during 1993, $108.4 million were obtained
through acquisitions. This segment is widely diversified and there were no
significant industry concentrations.
Loans to individuals at December 31, 1993 were $1,347.7 million, up $196.5
million from December 31, 1992. Loans to individuals accounted for 14.2% and
15.0% of total loans at year-end 1993 and 1992, respectively. Of the total
increase in loans to individuals during 1993, $44.8 million were obtained
through acquisitions.
24
<PAGE> 9
LOAN PORTFOLIO
(TABLE 6)
The following table presents loans by type and percent of total at the end of
each of the last five years.
<TABLE>
<CAPTION>
December 31
--------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- -----------------------------------------------------------------------------------------------------------------------------------
(In Millions) Amount % Amount % Amount % Amount % Amount %
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial
and agricultural $2,814.1 29.5% $2,378.0 31.2% $1,911.1 31.7% $1,899.5 33.9% $1,730.1 36.3%
Real estate construction 448.6 4.7 332.5 4.4 382.2 6.3 518.7 9.2 466.0 9.8
Commercial real estate
mortgage 2,594.5 27.2 2,026.6 26.6 1,537.8 25.5 1,100.1 19.6 796.7 16.7
Residential real estate
mortgage 2,322.1 24.4 1,736.6 22.8 1,160.2 19.2 1,041.7 18.6 810.4 17.0
- ---------------------------------------------------------------------------------------------------------------------------------
Total real estate loans 5,365.2 56.3 4,095.7 53.8 3,080.2 51.0 2,660.5 47.4 2,073.1 43.5
Loans to individuals 1,347.7 14.2 1,151.2 15.0 1,047.0 17.3 1,046.4 18.7 961.6 20.2
- ---------------------------------------------------------------------------------------------------------------------------------
9,527.0 100.0 7,624.9 100.0 6,038.3 100.0 5,606.4 100.0 4,764.8 100.0
Unearned income (78.7) (78.3) (73.3) (75.0) (74.3)
- --------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income 9,448.3 7,546.6 5,965.0 5,531.4 4,690.5
Allowance for loan losses (135.2) (103.8) (80.4) (70.8) (59.7)
- -------------------------------------------------------------------------------------------------------------------------------
Net Loans $9,313.1 $7,442.8 $5,884.6 $5,460.6 $4,630.8
===============================================================================================================================
</TABLE>
As of December 31, 1993, maturities of loans in the indicated classifications
and sensitivity to changes in interest rates on certain of these loans were as
follows:
<TABLE>
<CAPTION>
Maturities Loans Maturing After One Year
- ---------------------------------------------------------------------------------------------------------------
Fixed Adjustable
One Year One to Over Interest Interest
(In Millions) or Less Five Years Five Years Totals Rate Rate
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Real estate - construction 294.8 113.7 40.1 448.6 63.5 90.3
Real estate - commercial mortgage 641.0 1,380.7 572.8 2,594.5 935.0 1,018.5
Real estate - residential mortgage 565.5 490.6 1,266.0 2,322.1 810.8 945.8
Loans to individuals 502.9 706.7 138.1 1,347.7 718.2 126.6
Lease financing 0.9 195.8 1.1 197.8 196.8 0.0
Commercial, financial,
agricultural and other 1,558.4 737.0 320.8 2,616.2 630.3 427.6
Foreign 0.0 0.1 0.0 0.1 0.1 0.0
- ---------------------------------------------------------------------------------------------------------------
Total loans 3,563.5 3,624.6 2,338.9 9,527.0 3,354.7 2,608.8
- ---------------------------------------------------------------------------------------------------------------
Unearned income (78.7)
- ---------------------------------------------------------------------------------------------------------------
Net loans 9,448.3
===============================================================================================================
</TABLE>
The following table presents details of commercial real estate mortgage loans.
<TABLE>
<CAPTION>
(In Millions) Ala. Fla. Ga. Tenn. Carolinas Va. Other Total
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Secured by income producing properties:
Land $ 15.2 $ 12.6 $ 6.3 $ 3.8 $ 0.7 $ 0.3 $ 7.8 $ 46.7
Retail 91.4 59.9 71.1 26.2 10.5 9.5 73.9 342.5
Office 49.3 30.2 40.5 26.8 4.0 0.0 19.1 169.9
Office-Warehouse 23.0 33.8 15.0 6.6 15.8 0.0 7.9 102.1
Apartments 74.0 81.9 44.5 7.9 7.3 21.3 53.8 290.7
Condominiums/Townhouses 1.5 0.7 2.0 0.2 0.3 0.0 0.0 4.7
Motels/Hotels 26.0 7.4 0.0 0.0 1.8 3.8 5.1 44.1
Industrial 5.6 7.0 2.1 0.0 0.6 0.0 2.8 18.1
Other 70.2 53.5 44.7 14.0 3.1 0.2 46.5 232.2
- -------------------------------------------------------------------------------------------------------------------------------
356.2 287.0 226.2 85.5 44.1 35.1 216.9 1,251.0
Commercial real estate mortgages
secured by owner occupied properties 436.9 322.8 120.5 72.6 110.5 5.9 274.3 1,343.5
- -------------------------------------------------------------------------------------------------------------------------------
Total commercial real estate mortgages $793.1 $609.8 $346.7 $158.1 $154.6 $41.0 $491.2 $2,594.5
===============================================================================================================================
</TABLE>
25
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SouthTrust Corporation
NON-PERFORMING ASSETS
Non-performing assets at December 31, 1993, were $113.1 million or 1.19% of
loans, net of unearned income, plus other real estate owned ("OREO"). This
represents a decrease of $15.7 million from the December 31, 1992, level of
$128.8 million or 1.69% of loans, net of unearned income, plus OREO. At
December 31, 1993, total non-performing assets included $58.6 million in loans
on non-accrual status, $8.8 million in restructured loans, and $45.7 million in
OREO. Total OREO included $3.7 million in loans where conditions related to the
borrower indicated substantive repossession of the collateral had occurred.
During 1993, the total OREO obtained through acquisitions was $9.2 million.
Total non-performing loans, consisting of loans on non-accrual status and
restructured loans, included real estate construction loans of $1.5 million,
commercial real estate mortgage loans of $35.1 million, residential real estate
mortgage loans of $7.2 million, commercial, financial and agricultural loans of
$21.0 million, and loans to individuals of $2.6 million. Combined non-
performing real estate loans and properties taken in foreclosure of real estate
loans totaled $89.5 million at December 31, 1993, representing 79% of total
non-performing assets, compared to $76.9 million or 60% at December 31, 1992.
Although real estate values in the recent past declined, the reduction in
market interest rates during 1992 and 1993 have improved commercial real estate
values, particularly for income-producing properties. These lower interest
rates have reduced debt-service costs to borrowers, creating more positive cash
flow to them and has resulted in a lower level of foreclosures and a
leveling-off of problem commercial real estate loan assets. Increasing interest
rates, or weakening general economic conditions could result in a decline in
commercial real estate values and/or difficulty in borrowers' ability to
comply with repayment terms, resulting in increased foreclosures and problem
commercial real estate assets, and could potentially have an adverse effect on
the Company's earnings.
In addition to loans on non-performing status at December 31, 1993, the
Company had loans of approximately $22.1 million for which Management has
serious doubts as to the ability of the borrowers to comply with the present
repayment terms, which may result in the loan repayment terms being
restructured, and/or the loans going on non-performing status. Such loans are
continuously reviewed by Management, and their classification may be changed
if conditions warrant. At December 31, 1992, potential problem loans totaled
$14.9 million.
Loans 90 days past due and accruing were $13.2 million at December 31,
1993, compared to $11.1 million at December 31, 1992.
26
<PAGE> 11
NON-PERFORMING ASSETS
(TABLE 7)
The following table summarizes the Company's non-performing assets and accruing
loans 90 days or more past due as of December 31 for the last five years.
<TABLE>
<CAPTION>
(In Millions) 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Non-accrual loans $ 58.6 $ 71.6 $ 70.6 $ 42.0 $ 32.9
Restructured loans 8.8 0.7 3.7 8.7 5.3
- --------------------------------------------------------------------------------------------------------------------------------
Total non-performing loans 67.4 72.3 74.3 50.7 38.2
Other real estate owned 45.7 56.5 68.3 60.4 19.8
- --------------------------------------------------------------------------------------------------------------------------------
Total non-performing assets 113.1 128.8 142.6 111.1 58.0
Accruing loans 90 days or more past due 13.2 11.1 12.0 13.9 6.5
- --------------------------------------------------------------------------------------------------------------------------------
Total non-performing assets and accruing
loans 90 days or more past due $ 126.3 $ 139.9 $154.6 $125.0 $ 64.5
================================================================================================================================
Provision for loan losses $ 45.0 $ 43.3 $ 38.0 $ 44.6 $ 21.2
Net charge-offs 24.6 31.5 31.7 37.0 16.6
Ratios:
For the Period Ended:
Net charge-offs as a % of average net loans 0.29% 0.49% 0.55% 0.74% 0.38%
Provision for loan losses as a % of net charge-offs 182.95 137.31 120.04 120.65 127.26
Period End:
Allowance as a % of net loans 1.43 1.38 1.35 1.28 1.27
Allowance as a % of non-performing loans 200.70 143.35 108.23 139.54 156.36
Allowance as a % of non-performing assets 119.59 80.54 56.39 63.73 102.94
Allowance as a % of non-performing assets
and accruing loans 90 days or more past due 107.06 74.14 52.02 56.62 92.60
Non-performing loans as a % of net loans 0.71 0.96 1.25 0.92 0.81
Non-performing assets as a % of loans
net of unearned income plus OREO 1.19 1.69 2.36 1.99 1.23
Non-performing assets and accruing loans
90 days or more past due as a % of loans
net of unearned income plus OREO 1.33 1.84 2.56 2.24 1.37
</TABLE>
As of December 31, 1993, the Company had loans of approximately $22.1 million
for which Management has serious doubts as to the ability of the borrowers to
comply with the present repayment terms, and may result in the loans'
repayment terms being restructured, and/or the loans going on non-performing
status. Such loans are continuously reviewed by Management, and their
classification may be changed if conditions warrant.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses increased $31.5 million to $135.2 million
or 1.43% of net loans outstanding at December 31, 1993, from $103.8 million or
1.38% of net loans at year-end 1992. This represented an increase in the
allowance for loan loss coverage of non-performing loans from 143% to 201% over
that period. During 1993, the provision for loan losses added $45.0 million to
the allowance for loan losses and net charge-offs reduced the allowance for
loan losses by $24.6 million. Existing allowances for loan losses of acquired
institutions totaled $11.0 million and also augmented the total allowance. The
allowance for loan losses is established to cover losses inherent in the
portfolio. As asset quality and economic conditions change, the allowance for
loan losses will be increased or decreased accordingly.
Net charge-offs during 1993 totaled $24.6 million or .29% of average net
loans, a decrease of $6.9 million from $31.5 million or .49% of net loans
during 1992. During 1993, total loans charged-off were $36.6 million and total
recoveries of previously charged-off loans were $12.0 million. Net charge-offs
by major category during 1993 were commercial, financial and agricultural loans
of $9.7 million, real estate construction loans of $0.4 million, commercial
real estate mortgage loans of $1.4 million, residential real estate mortgage
loans of $2.2 million, and loans to individuals of $10.9 million. Management
has taken into consideration present and expected economic conditions, the
level of risk in the portfolio, the level of potential problem loans, and
delinquencies in assessing the allowance for loan losses, and considers the
allowance for loan losses to be adequate.
27
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SouthTrust Corporation
ALLOWANCE FOR LOAN LOSSES
(TABLE 8)
The following table summarizes information concerning the allowance for loan
losses:
<TABLE>
<CAPTION>
Year Ended December 31
(In Millions) 1993 1992 1991 1990 1989
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans outstanding at year end, net of unearned income $9,448.3 $ 7,546.6 $5,965.0 $5,531.4 $4,690.5
===============================================================================================================
Average loans outstanding, net of unearned income $8,422.0 $ 6,466.7 $5,718.0 $5,003.6 $4,345.3
===============================================================================================================
(In Thousands)
Balance beginning of year $103,770 $ 80,393 $ 70,812 $ 59,679 $ 51,991
Loans charged-off:
Commercial, financial and agricultural 13,977 15,619 15,786 22,856 7,088
Real estate construction 657 603 1,201 499 372
Commercial real estate mortgage 1,737 1,495 2,651 1,412 1,208
Residential real estate mortgage 2,545 1,402 902 1,227 991
Loans to individuals 17,704 20,943 21,046 17,973 14,274
- ---------------------------------------------------------------------------------------------------------------
Total loans charged-off 36,620 40,062 41,586 43,967 23,933
- ---------------------------------------------------------------------------------------------------------------
Recoveries of loans previously charged-off:
Commercial, financial and agricultural 4,251 2,959 5,342 3,257 3,050
Real estate construction 260 22 46 48 11
Commercial real estate mortgage 344 158 189 45 105
Residential real estate mortgage 367 235 90 155 285
Loans to individuals 6,783 5,150 4,228 3,467 3,850
- ---------------------------------------------------------------------------------------------------------------
Total recoveries 12,005 8,524 9,895 6,972 7,301
- ---------------------------------------------------------------------------------------------------------------
Net loans charged-off 24,615 31,538 31,691 36,995 16,632
Additions to allowance charged to expense 45,032 43,305 38,042 44,635 21,166
Subsidiaries' allowance at date of purchase 11,046 11,610 3,230 3,493 3,154
- ---------------------------------------------------------------------------------------------------------------
Allowance for loan losses, end of year:
Commercial, financial and agricultural 38,725 25,158 20,342 26,402 23,803
Real estate construction 4,786 12,062 10,358 8,990 6,940
Commercial real estate mortgage 42,341 14,787 9,252 9,540 7,822
Residential real estate mortgage 14,032 12,972 8,858 8,297 6,400
Loans to individuals 15,565 29,071 24,914 13,127 11,170
Unallocated portion of reserve 19,784 9,720 6,669 4,456 3,544
- ---------------------------------------------------------------------------------------------------------------
Balance end of year $135,233 $103,770 $80,393 $ 70,812 $ 59,679
===============================================================================================================
Ratios:
End-of-year allowance to net loans outstanding 1.43% 1.38% 1.35% 1.28% 1.27%
Net loans charged-off to net average loans 0.29 0.49 0.55 0.74 0.38
Provision for loan losses to net charge-offs 182.95 137.31 120.04 120.65 127.26
Provision for loan losses to net average loans 0.53 0.67 0.67 0.89 0.49
End-of-year allowance to net average loans 1.61 1.60 1.41 1.42 1.37
</TABLE>
See Note A to Consolidated Financial Statements for discussion of the
determination of the provision for loan losses.
28
<PAGE> 13
SECURITIES AND SECURITIES AVAILABLE FOR SALE
On December 31, 1993, the Company adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The adoption of SFAS No. 115
resulted in designating $2,454.8 million of securities as available for sale,
which have been recorded at fair value. The difference in amortized cost and
fair value has been recorded as an increase in stockholders' equity, net of
deferred income taxes, in the amount of $10.2 million. The securities have been
classified as available for sale in order to provide a source of liquidity to
the Company. Securities classified as held to maturity totaled $1,278.0 million
and are carried at amortized cost, as the Company has the ability and positive
intent to hold these securities to maturity. The accounting policy concerning
securities is discussed in Note A to the Consolidated Financial Statements -
Accounting Policies, included elsewhere in this report.
Prior to the adoption of SFAS No. 115, securities determined to be held on
a long-term basis or until maturity were accounted for in a manner similar to
securities held to maturity.
At December 31, 1993, total securities, including securities available for
sale and securities held to maturity, totaled $3,732.8 million, including $16.4
million in net unrealized gain on securities available for sale. This
represents a decrease of $23.4 million from the 1992 level of $3,756.2 million.
This decrease is largely attributable to efforts by the Company to shift a
larger portion of earning assets to loans, which was possible due to the
increased loan demand in 1993. The decision to increase loans to a higher
percentage of total earning assets was made due to higher yields available on
loans as compared to securities and other earning assets. At December 31, 1993,
total securities were comprised of $658.0 million in U.S. Treasury Securities,
$756.5 million in U.S. Government Agency Securities, $1,765.6 million in
mortgage-backed securities, $356.4 million in securities issued by state and
political subdivisions, and $196.3 million in other securities.
At year-end 1993, the fair value of securities held to maturity exceeded
the book value by $49.2 million, and included gross unrealized gains of $49.9
million and gross unrealized losses of $0.7 million. The unrealized gain on
securities available for sale of $16.4 million was the result of $19.1 million
in gross unrealized gains and $2.7 million in gross unrealized losses. During
1993, proceeds from sales of securities were a modest .66% of the average
securities portfolio and resulted in gross gains of $1.0 million and gross
losses of $0.4 million. The unrealized gains and losses in the securities held
to maturity portfolio at year-end 1993 are not expected to have a material
impact on future income, liquidity or capital resource trends.
SHORT-TERM INVESTMENTS
At December 31, 1993, total short-term investments were $308.1 million, up $9.8
million from $298.3 million at year-end 1992. At year-end 1993, short-term
investments included $1.8 million in federal funds sold, $0.2 million in
securities purchased under agreements to resell, $47.6 million in
interest-bearing deposits with other banks, and assets held for sale of $258.5
million. Assets held for sale consisted of $243.8 million in mortgage loans in
the process of being securitized and sold to third-party investors, and $14.7
million in investment securities held for trading purposes. Mortgage loans held
for sale are carried at the lower of cost or fair value. Trading account
securities are carried at fair value with unrealized gains and losses
recognized in net income.
The Company's Asset/Liability Management Committee monitors current and
future expected economic conditions, as well as the Company's liquidity
position in determining desired balances of short-term investments and
alternative uses of such funds.
29
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SouthTrust Corporation
SECURITIES AND SECURITIES AVAILABLE FOR SALE
(TABLE 9)
The following table provides an analysis of amortized cost and fair value of
securities and securities available for sale as well as their maturities and
year-end yields at December 31, 1993.
<TABLE>
<CAPTION>
Held to Maturity Available for Sale
- ----------------------------------------------------------------------------- -----------------------------
December 31,1993 Amortized Fair Year-end Amortized Fair Year-end
(Dollars in Millions) Cost Value Yield(1) Cost Value Yield(1)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury:
Within one year $ 2.1 $ 2.1 4.68% $ 410.1 $ 412.7 4.92%
One to five years 4.0 4.0 4.01 236.4 237.2 4.20
Five to 10 years - - - 0.8 0.9 7.51
More than 10 years - - - 1.0 1.1 7.27
- --------------------------------------------------------------------------------------------------------------
Total 6.1 6.1 4.24 648.3 651.9 4.67
- --------------------------------------------------------------------------------------------------------------
U.S. Government agencies:
Within one year 5.0 5.0 4.44 62.3 63.9 7.46
One to five years 240.9 241.4 4.72 287.9 294.6 5.86
Five to 10 years 102.8 105.9 6.33 48.4 48.8 6.03
More than 10 years 0.5 0.5 3.98 - - -
- --------------------------------------------------------------------------------------------------------------
Total 349.2 352.8 5.19 398.6 407.3 6.13
- --------------------------------------------------------------------------------------------------------------
Mortgage-backed securities:
Within one year 10.5 10.6 7.47 27.1 27.4 6.54
One to five years 116.4 119.7 7.75 250.8 252.9 6.34
Five to 10 years 135.1 139.6 8.54 271.6 272.6 5.24
More than 10 years 181.6 187.6 7.67 768.9 769.1 5.19
- --------------------------------------------------------------------------------------------------------------
Total 443.6 457.5 7.95 1,318.4 1,322.0 5.45
- --------------------------------------------------------------------------------------------------------------
States and political subdivisions:
Within one year 20.1 20.4 9.89 - - -
One to five years 96.8 103.4 10.83 - - -
Five to 10 years 79.1 84.9 9.37 - - -
More than 10 years 160.4 175.7 8.44 - - -
- --------------------------------------------------------------------------------------------------------------
Total 356.4 384.4 9.38 - - -
- --------------------------------------------------------------------------------------------------------------
Other securities:
Within one year 10.4 10.6 8.20 0.5 0.5 3.57
One to five years 33.1 34.2 7.79 2.5 2.6 5.80
Five to 10 years 10.6 15.4 6.51 18.6 18.6 6.71
More than 10 years 68.6 66.2 5.47 51.5 51.9 4.84
- --------------------------------------------------------------------------------------------------------------
Total 122.7 126.4 6.42 73.1 73.6 5.34
- --------------------------------------------------------------------------------------------------------------
Total:
Within one year 48.1 48.7 8.21 500.0 504.5 5.32
One to five years 491.2 502.7 6.84 777.6 787.3 5.51
Five to 10 years 327.6 345.8 7.98 339.4 340.9 5.44
More than 10 years 411.1 430.0 7.60 821.4 822.1 5.17
- --------------------------------------------------------------------------------------------------------------
Total securities and securities
available for sale $1,278.0 $1,327.2 7.43% $2,438.4 $2,454.8 5.36%
===============================================================================================================
</TABLE>
(1) Fully taxable equivalent.
30
<PAGE> 15
FUNDING
The Company's funding sources can be divided into three broad categories:
deposits, short-term borrowings, and long-term borrowings.
Total borrowed funds at December 31, 1993, were $13.4 billion, up $1.8
billion or 15% from the 1992 level of $11.6 billion.
DEPOSITS
Deposits are the Company's primary source of funding. At December 31, 1993,
total deposits were $11,515.4 million, up $1,433.1 million or 14% from the 1992
level of $10,082.3 million. During 1993, the Company acquired deposits of
financial institutions totaling approximately $1,050.7 million.
The largest portion of the increase in total deposits was an increase in
consumer time and savings deposits of $1,164.0 million or 16% to $8,274.7
million. Other time deposits, consisting of time deposits of $100,000 and over,
increased $84.0 million or 6% to $1,457.8 million. Non-interest-bearing demand
deposits increased $185.1 million or 12% to $1,782.9 million.
Non-interest-bearing demand deposits accounted for 15.5% and 15.8% of total
deposits at December 31, 1993 and 1992, respectively.
Core deposits are defined as demand deposits and time deposits under
$100,000. At December 31, 1993, core deposits totaled $10,057.5 million or
87.3% of total deposits, compared to $8,708.5 million or 86.4% of total
deposits at December 31, 1992.
DEPOSITS
(TABLE 10)
The average daily balance of deposits and rates paid on such deposits are
summarized for the periods indicated in the following table.
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------------------------------------------------
1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
(In Millions) Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Demand deposits:
Non-interest-bearing $ 1,606.0 $1,293.1 $ 997.6
Interest-bearing 1,299.3 2.14% 1,013.3 2.83% 711.4 4.52%
Savings deposits 683.2 2.52 531.5 3.10 399.0 4.61
Time deposits 7,184.1 4.05 6,158.2 4.75 5,538.4 6.56
- ---------------------------------------------------------------------------------------------------------------
Totals $10,772.6 $8,996.1 $7,646.4
===============================================================================================================
</TABLE>
Maturities of time certificates of deposit and other time deposits of $100,000
or more outstanding at December 31, 1993, are summarized as follows:
<TABLE>
<CAPTION>
Time Other
Certificates Time
(In Millions) of Deposit Deposits Total
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Within three months $ 467.1 $110.4 $ 577.5
After three through six months 257.1 9.8 266.9
After six through 12 months 181.3 13.6 194.9
After 12 months 380.9 37.6 418.5
- --------------------------------------------------------------------------------------------------------------
Totals $1,286.4 $171.4 $1,457.8
==============================================================================================================
</TABLE>
31
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SouthTrust Corporation
SHORT-TERM BORROWINGS
Short-term borrowings consist of federal funds purchased, securities sold
under agreements to repurchase, and miscellaneous other borrowed funds.
Total short-term borrowings increased $125.3 million, or 9%, to $1,456.4
million at December 31, 1993, from $1,331.1 million at December 31, 1992. At
December 31, 1993, total short-term borrowings included federal funds purchased
of $532.5 million, securities sold under agreements to repurchase of $674.5
million, and other borrowed funds of $249.4 million.
At year-end 1993, total short-term borrowings were 10.8% of total funding
compared to 11.4% at December 31, 1992.
SHORT-TERM BORROWINGS
(TABLE 11)
The following table presents the federal funds purchased, securities sold under
agreements to repurchase, and other borrowed funds; the weighted-average
interest rate at December 31, 1993, 1992 and 1991; the average outstanding
borrowings; the daily weighted-average interest rate for each year; and the
maximum outstanding balance of federal funds purchased, and securities sold
under agreements to repurchase, and other borrowed funds at any month end
during each year. Such short-term borrowings are issued on normal banking
terms.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Year Ended December 31
- --------------------------------------------------------------------------------------------------------------
Federal Funds
Purchased and Securities Other
Sold Under Agreements Short-term
(In Millions) to Repurchase Borrowings
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1993 1,207.0 249.4
1992 1,181.7 149.4
1991 812.2 90.7
- --------------------------------------------------------------------------------------------------------------
Weighted-average interest rate at year end:
1993 2.99 3.58
1992 3.04 1.77
1991 4.46 3.57
- --------------------------------------------------------------------------------------------------------------
Maximum amount outstanding at any month end:
1993 1,487.4 249.4
1992 1,284.9 149.4
1991 934.6 126.4
- --------------------------------------------------------------------------------------------------------------
Average amount outstanding during the year:
1993 1,227.2 112.8
1992 838.5 87.0
1991 787.6 81.1
- --------------------------------------------------------------------------------------------------------------
Weighted-average interest rate during the year:
1993 3.03 3.41
1992 3.48 2.55
1991 5.74 4.84
- --------------------------------------------------------------------------------------------------------------
</TABLE>
LONG-TERM DEBT
Long-term debt at December 31, 1993, totaled $470.0 million compared to $258.2
million at December 31, 1992. During 1993, the Company issued $100 million in
7.00% Subordinated Notes due 2003 in a public offering. The Company also
obtained $100.0 million in long-term debt consisting of primarily Federal Home
Loan Bank advances. Long-term debt added through acquisitions completed during
1993 totaled $96.7 million. Payments of long-term debt during 1993 totaled $85.0
million and included the redemption of $9.1 million of 8-3/4% Senior Notes due
in 1997 and the redemption of $21.7 million of 8-1/2% debentures due in 2003.
Note H - Long-Term Debt, of the Consolidated Financial Statements, included
elsewhere in this report, provides details of long-term debt issues, scheduled
maturities, and other terms of the debt agreements.
At December 31, 1993, the Company's debt- to-equity ratio was 44.7%
compared to 30.0% at December 31, 1992.
Scheduled maturities of long-term debt are not expected to have a
significant impact on the Company's liquidity. There are no plans at present to
repay any significant amounts of outstanding indebtedness prior to the
scheduled maturity.
32
<PAGE> 17
LIQUIDITY
Liquidity refers to the ability of the Company to meet its cash-flow
requirements, operating needs, and the borrowing needs and withdrawal
requirements of customers on a timely basis. A company may achieve its desired
liquidity objectives from management of assets and liabilities, and through
funds provided through operations. Funds invested in short-term marketable
instruments, the continuous maturing of other earning assets, the possible sale
of securities available for sale and the ability to securitize certain types of
loans provide sources of liquidity from the asset perspective. The liability
base provides sources of liquidity through deposit growth, the maturity
structure of liabilities, and accessibility to market sources of funds.
Net cash provided through operating activities during 1993 of $188.9
million included net income of $150.5 million and the provision for loan losses
of $45.0 million and other non-cash charges to income, primarily depreciation
of fixed assets and amortization of intangible assets. The Consolidated
Statements of Cash Flows, included elsewhere in this report, provides an
analysis of proceeds and uses of cash from operating, investing, and financing
activities for each of the three years in the period ended December 31, 1993.
Table 6, Loan Portfolio, included elsewhere in this report, shows loan
maturities as of December 31, 1993. Approximately 37% of total loans mature
within one year. Of the $5,963.5 million maturing after one year, $2,608.8
million or 44% had adjustable interest rates. Repayments of loans and scheduled
maturities represent a substantial source of liquidity.
With the adoption of SFAS No. 115 on December 31, 1993, the Company has
designated $2,454.8 million in securities as available for sale. Though
Management has no present plans to dispose of the available-for-sale portion of
the securities portfolio, such securities do represent salable funds to meet
liquidity needs. Table 9, Securities and Securities Available for Sale,
included elsewhere in this report, shows the maturity distribution of the
Company's securities portfolio by major category. On December 31, 1993,
securities designated as held to maturity included $48.1 million or 4% of the
portfolio, which had maturities of one year or less, and $491.3 million or 38%
that mature within one to five years. Note D of the Consolidated Financial
statements includes an analysis of the carrying amount and fair values of the
securities portfolio by contractual maturity and an analysis of gross
unrealized gains and gross unrealized losses in the investment securities
portfolio at December 31, 1993, by major category. For securities held to
maturity, gross unrealized gains at December 31, 1993, were $49.9 million and
gross unrealized losses were $0.6 million and would have no effect on the
Company's liquidity position.
Core deposits, defined as total deposits less time deposits of $100,000 and
over, constitute the strongest element of the liability side of the liquidity
position. Significant growth in core deposits, $1.3 billion or 15% in 1993,
provides a great deal of liquidity. Table 10, Deposits, included elsewhere in
this report, details average balances of deposits by type, the weighted average
rate paid by type, and a maturity distribution of deposits of $100,000 or more.
Short-term funds secured from external sources include federal funds
purchased, securities sold under agreements to repurchase, and other borrowed
funds. Average short-term borrowings during 1993 were $1,340.0 million and
average short-term investments were $279.1 million, resulting in an average
short-term borrowing position of $1,060.9 million in 1993.
The primary source of funds available to SouthTrust Corporation, the
parent Company, is payment of dividends from its subsidiaries. Banking laws
and other regulations limit the amount of dividends a bank subsidiary may pay
without prior regulatory approval. At December 31, 1993, $269.8 million of the
net assets of subsidiaries was available for payment without prior regulatory
approval. Substantially all other net assets were restricted as to payments to
the parent Company.
No trends in the sources or uses of cash by the Company are expected to
have an impact on the Company's liquidity position. The Company believes that
the level of liquidity is sufficient to meet current and future liquidity
requirements.
33
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SouthTrust Corporation
INTEREST RATE SENSITIVITY ANALYSIS
(TABLE 12)
<TABLE>
<CAPTION>
Non-rate
Sensitive
0-30 31-90 91-180 181-365 and Over
(In Millions) Days Days Days Days One Year Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Variable-rate commercial and
real estate loans $3,598.0 $ 180.5 $216.6 $ 391.4 $ 86.0 $ 4,472.5
Fixed-rate commercial and
real estate loans 261.1 158.9 183.1 274.2 2,157.4 3,034.7
Loans to individuals 427.7 118.8 178.0 355.5 861.1 1,941.1
- ----------------------------------------------------------------------------------------------------------------------------------
Total loans 4,286.8 458.2 577.7 1,021.1 3,104.5 9,448.3
Securities 1,327.7 282.6 311.7 416.5 1,394.3 3,732.8
Other earning assets 144.3 163.6 0.1 0.0 0.1 308.1
- ----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 5,758.8 904.4 889.5 1,437.6 4,498.9 13,489.2
Other assets 2.7 0.0 0.0 0.0 1,351.3 1,354.0
Less: Allowance for loan losses 0.0 0.0 0.0 0.0 (135.2) (135.2)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Assets $5,761.5 $ 904.4 $889.5 $1,437.6 $5,715.0 $14,708.0
==================================================================================================================================
Non-interest-bearing demand deposits $ 0.0 $ 0.0 $ 0.0 $ 0.0 $1,782.9 $ 1,782.9
Interest-bearing demand deposits 1,004.8 9.0 14.5 5.9 469.8 1,504.0
Money market deposits 1,774.1 1.1 0.0 0.4 28.2 1,803.8
Savings deposits 754.2 0.0 0.0 0.0 0.0 754.2
Time deposits under $100,000 376.1 887.6 599.6 1,142.5 1,206.9 4,212.7
Other time deposits 419.9 267.3 241.3 321.2 208.1 1,457.8
- ----------------------------------------------------------------------------------------------------------------------------------
Total deposits 4,329.1 1,165.0 855.4 1,470.0 3,695.9 11,515.4
Short-term borrowings 1,165.2 210.0 48.5 26.1 6.6 1,456.4
Long-term debt 0.0 110.0 0.0 0.0 360.0 470.0
Other liabilities 0.0 0.0 0.0 0.0 214.4 214.4
Stockholders' equity 0.0 0.0 0.0 0.0 1,051.8 1,051.8
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $5,494.3 $1,485.0 $903.9 $1,496.1 $5,328.7 $14,708.0
==================================================================================================================================
Interest rate sensitivity gap $ 267.2 ($ 580.6) ($ 14.4) ($ 58.5) $ 368.3
Cumulative interest rate sensitivity gap 267.2 (313.4) (327.8) (386.3)
Cumulative gap as a percentage of
earning assets at December 31, 1993 1.98% (2.32%) (2.43%) (2.86%)
Cumulative gap as a percentage of
earning assets at December 31, 1992 (1.05%) (4.81%) (6.62%) (2.14%)
==================================================================================================================================
</TABLE>
34
<PAGE> 19
CAPITAL
The assessment of capital adequacy is dependent on several factors including
asset quality, earnings trends, liquidity, and economic conditions. The Company
continually monitors current and projected capital adequacy positions of both
the Company and its subsidiaries. Maintaining adequate capital levels is
integral to provide stability to the Company, resources to achieve the
Company's growth objectives, and provide a return to the stockholders in the
form of dividends.
Stockholders' equity at December 31, 1993, was $1,051.8 million or 7.15% of
year-end assets compared to $860.4 million or 6.77% in 1992. During 1993, net
income added $150.5 million to stockholders' equity and dividends declared
totaled $46.2 million, resulting in an internal common equity generation rate
of 11.0% in 1993, compared to 10.8% in 1992.
During 1993, sales of common stock through the dividend reinvestment plan,
the employee stock purchase plan, and the stock option plans, totaling 348,366
shares added $4.7 million to equity.
During 1993, 4,588,607 shares of common stock were issued in connection
with acquisitions of financial institutions, adding $72.5 million to equity.
The adoption of SFAS No. 115 resulted in recording an unrealized net of tax
gain, which increased equity by $10.2 million. Treasury stock purchases for
shares reduced equity by $0.3 million.
The annual dividend rate during 1993 was $0.60 per share, representing a
15% increase over 1992. For 1994, the indicated annual dividend rate is $0.68
per share, marking the twenty-fourth consecutive year in which SouthTrust has
increased its dividend. The dividend pay-out ratio during 1993 was 30.7%. Table
1, "Selected Financial Information", includes a six-year history of the
dividend pay-out ratio.
The Federal Reserve Board, which is the regulatory agency governing bank
holding companies, has guidelines for determining ratios to aid in the analysis
and determination of capital levels required to support a company's operations.
Likewise, the Office of the Comptroller of the Currency and the Federal Deposit
Insurance Corporation prescribe various minimum levels of capital that must be
held by the Company's subsidiary banks. The Federal Reserve Board and each
bank's primary regulator have adopted risk-based capital guidelines that
incorporate factors weighing the relative credit risk of assets and items with
off-balance-sheet exposure. The guidelines also define regulatory capital,
placing strong emphasis on the equity components of regulatory capital.
The rules require a risk-based capital ratio of 8%, at least one-half of
which must be made up of Core or Tier I capital elements. Tier I capital
generally consists of common stockholders' equity less goodwill and net
unrealized gains on securities available for sale. Total risk-based capital
includes Tier I capital, and supplemental capital elements, which consist of
certain subordinated debt and the reserve for loan losses subject to certain
limitations. The guidelines also impose a leverage requirement, defined as the
ratio of Tier I capital to average assets subject to certain adjustments. The
leverage ratio generally must exceed 3% and is driven by evaluation and
discretion of the regulators. At December 1993, SouthTrust had a total
risk-based capital ratio of 12.39%, consisting of Tier I capital elements of
8.55% and supplemental capital elements of 3.84%, and a leverage ratio of
6.51%. The Federal Deposit Insurance Corporation Improvement Act of 1992
provided further guidance as to capital levels to be maintained by insured
depository institutions and corresponding supervisory treatments. Under these
guidelines the capital level at all of SouthTrust's bank subsidiaries are
considered "well capitalized," the highest of the five supervisory groupings.
Table 13, Capital Position, presents relevant capital ratios for 1993 and
1992.
CAPITAL POSITION
(TABLE 13)
<TABLE>
<CAPTION>
December 31
-----------
1993 1992
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Tier I capital ratio 8.55% 8.67%
Supplemental capital elements 3.84 3.51
- ---------------------------------------------------------------------------------------------------------------
Total risk-based capital ratio 12.39 12.18
===============================================================================================================
Leverage ratio 6.51% 6.48%
===============================================================================================================
</TABLE>
35
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SouthTrust Corporation
QUARTERLY INCOME INFORMATION
(TABLE 14)
The Company's unaudited consolidated operating results for each quarter of 1993
and 1992 are summarized in the table below.
(In Thousands, except per share amounts.)
<TABLE>
<CAPTION>
1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Three Months Ended
----------------------------------------- ------------------------------------------
Dec. 31 Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income $236,101 $235,209 $231,909 $224,332 $212,367 $208,179 $207,258 $200,276
Interest expense 100,306 100,099 101,018 96,320 90,957 93,298 98,165 100,510
Net interest income 135,795 135,110 130,891 128,012 121,410 114,881 109,093 99,766
Securities gains (losses), net 34 16 207 346 133 245 306 (50)
Provision for
loan losses 10,909 11,718 11,100 11,305 11,345 11,369 10,305 10,286
Income before
income taxes 59,150 58,315 55,449 51,613 46,040 42,540 39,740 36,572
Net income 39,380 39,071 37,240 34,844 31,887 29,112 27,472 25,775
Net income per share $0.50 $0.50 $0.48 $0.46 $0.44 $0.42 $0.41 $0.39
Dividends declared per share 0.15 0.15 0.15 0.15 0.13 0.13 0.13 0.13
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE> 21
CAPITAL STOCK
(TABLE 15)
SouthTrust Common Stock is traded in the over-the-counter market and quoted on
the NASDAQ national market system under the symbol SOTR. As of November 29,
1993, approximately 10,632 shareholders of record owned Company stock. The
following table summarizes the historical book value per share and dividends
per share for each quarter of the past two years. Also included are the stock
market price ranges of SouthTrust shares, as reported by NASDAQ's national
market system.
<TABLE>
<CAPTION> Book Value per Share at Stock Market Price Range Dividends
End of Period Low High per Share
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993
First Quarter $12.00 $16 5/8 $21 3/8 $0.15
Second Quarter 12.35 17 3/4 22 1/8 0.15
Third Quarter 12.70 18 3/8 21 1/4 0.15
Fourth Quarter 13.25 17 1/4 19 7/8 0.15
Year 16 5/8 22 1/8 0.60
- --------------------------------------------------------------------------------------------------------------
1992
First Quarter $10.31 $14 1/8 $17 3/8 $0.13
Second Quarter 10.59 15 17 1/2 0.13
Third Quarter 11.19 15 1/2 18 1/8 0.13
Fourth Quarter 11.55 15 3/8 17 0.13
Year 14 1/8 18 1/8 0.52
- --------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SouthTrust Corporation
SIX-YEAR CONDENSED STATEMENT OF CONDITION
(TABLE 16)
<TABLE>
<CAPTION>
Growth Rate
-------------------
One Five-year
(In Millions) 1993 1992 1991 1990 1989 1988 Year Compound
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AVERAGE BALANCES:
Loans, net of unearned income $ 8,422.0 $ 6,466.7 $ 5,718.0 $5,003.6 $4,345.3 $3,793.8 30.24% 17.29%
Securities:
Taxable 3,498.8 2,969.9 2,245.3 1,858.3 1,412.6 1,149.3 17.81 24.94
Non-taxable 376.3 402.8 434.7 442.3 441.3 443.7 (6.58) (3.24)
- ----------------------------------------------------------------------------------------------------------------------------------
Total securities 3,875.1 3,372.7 2,680.0 2,300.6 1,853.9 1,593.0 14.90 19.46
Securities available for sale 0 0 0 0 0 0 .00 .00
Short-term investments:
Federal funds sold and securities
purchased under resale agreements 54.5 57.3 48.0 54.7 95.7 78.5 (4.89) (7.04)
Interest-bearing deposits
in other banks 19.4 46.3 57.9 58.5 76.3 157.1 (58.10) (34.18)
Assets held for sale 205.2 147.1 96.1 94.0 77.8 82.6 39.50 19.96
- ---------------------------------------------------------------------------------------------------------------------------------
Total short-term investments 279.1 250.7 202.0 207.2 249.8 318.2 11.33 (2.59)
- ----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 12,576.2 10,090.1 8,600.0 7,511.4 6,449.0 5,705.0 24.64 17.13
Allowance for loan losses (118.1) (90.7) (75.5) (64.0) (56.9) (50.1) 30.21 18.71
Other assets 1,194.9 1,028.8 887.2 780.9 686.4 577.5 16.15 15.65
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets $13,653.0 $11,028.2 $ 9,411.7 $8,228.3 $7,078.5 $6,232.4 23.80 16.98
=================================================================================================================================
DEPOSITS:
Interest-bearing $ 9,166.6 $ 7,703.0 $ 6,648.8 $5,568.8 $4,702.4 $4,109.1 19.00% 17.41%
Other 1,606.0 1,293.1 997.6 924.6 882.2 818.8 24.20 14.42
- ---------------------------------------------------------------------------------------------------------------------------------
Total deposits 10,772.6 8,996.1 7,646.4 6,493.4 5,584.6 4,927.9 19.75 16.93
Federal funds purchased and other
short-term borrowed funds 1,340.0 925.5 868.7 921.9 736.0 630.7 44.79 16.27
Long-term debt 415.2 206.9 142.9 148.5 146.8 148.4 100.68 22.85
Other liabilities 174.8 170.1 161.9 140.0 139.6 106.0 2.76 10.52
Stockholders' equity 950.4 729.6 591.8 524.5 471.5 419.4 30.26 17.78
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $13,653.0 $11,028.2 $ 9,411.7 $8,228.3 $7,078.5 $6,232.4 23.80 16.98
=================================================================================================================================
BALANCES AT YEAR END:
Loans, net of unearned income $ 9,448.3 $ 7,546.6 $ 5,965.0 $5,531.4 $4,690.5 $4,076.8 25.20% 18.31%
Securities:
Taxable 921.6 3,366.2 2,681.0 2,001.7 1,616.4 1,305.1 (72.62) (6.72)
Non-taxable 356.4 390.0 423.3 447.6 451.1 441.4 (8.62) (4.19)
- ----------------------------------------------------------------------------------------------------------------------------------
Total securities 1,278.0 3,756.2 3,104.3 2,449.3 2,067.5 1,746.5 (65.98) (6.06)
Securities available for sale 2,454.8 0 0 0 0 0 100.00 -
Short-term investments:
Federal funds sold and securities
purchased under resale agreements 2.0 49.1 20.5 16.0 41.4 35.5 (95.93) (43.75)
Interest-bearing deposits in other banks 47.6 50.5 38.2 44.7 116.7 107.5 (5.74) (15.04)
Assets held for sale 258.5 198.8 105.3 84.1 100.7 60.2 30.03 33.84
- ---------------------------------------------------------------------------------------------------------------------------------
Total short-term investments 308.1 298.4 164.0 144.8 258.8 203.2 3.25 8.68
- ---------------------------------------------------------------------------------------------------------------------------------
Total earning assets 13,489.2 11,601.2 9,233.3 8,125.5 7,016.8 6,026.5 16.27 17.49
Allowance for loan losses (135.2) (103.8) (80.4) (70.8) (59.7) (52.0) 30.25 21.06
Other assets 1,354.0 1,217.0 1,005.2 951.2 806.1 670.8 11.26 15.08
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets $14,708.0 $12,714.4 $10,158.1 $9,005.9 $7,763.2 $6,645.3 15.68 17.22
=================================================================================================================================
DEPOSITS:
Interest-bearing $ 9,732.5 $ 8,484.5 $ 7,171.6 $6,175.4 $5,125.5 $4,269.6 14.71% 17.91%
Other 1,782.9 1,597.8 1,105.6 1,052.6 929.0 849.5 11.58 15.98
Total deposits 11,515.4 10,082.3 8,277.2 7,228.0 6,054.5 5,119.1 14.21 17.60
Federal funds purchased and other
short-term borrowed funds 1,456.4 1,331.1 902.9 917.5 895.7 789.4 9.41 13.03
Long-term debt 470.0 258.2 140.2 148.8 144.8 147.0 82.03 26.17
Other liabilities 214.4 182.4 175.8 162.0 161.1 144.0 17.54 8.29
Stockholders' equity 1,051.8 860.4 662.0 549.6 507.1 445.8 22.25 18.73
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $14,708.0 $12,714.4 $10,158.1 $9,005.9 $7,763.2 $6,645.3 15.68 17.22
=================================================================================================================================
</TABLE>
38
<PAGE> 23
SIX-YEAR SUMMARY OF EARNINGS
(TABLE 17)
<TABLE>
<CAPTION>
Growth Rates
------------
One Five-year
(In Thousands, except per share data) 1993 1992 1991 1990 1989 1988 Year Compound
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $669,495 $561,757 $581,839 $554,262 $500,889 $400,217 19.18% 10.84%
Interest on securities:
Taxable 217,555 221,692 193,297 168,613 123,767 95,187 (1.87) 17.98
Non-taxable 26,435 30,246 33,654 34,833 35,562 35,319 (12.60) (5.63)
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest on securities 243,990 251,938 226,951 203,446 159,329 130,506 (3.15) 13.33
Interest on securities available for sale 0 0 0 0 0 0 0.00 0.00
Interest on federal funds sold
and securities purchased under
resale agreements 1,637 2,056 2,862 4,700 8,829 5,775 (20.38) (22.29)
Interest on time deposits in
other banks 890 2,001 3,760 5,000 7,224 12,795 (55.52) (41.32)
Interest on assets held for sale 11,539 10,328 8,313 9,253 8,353 8,380 11.73 6.61
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest income 927,551 828,080 823,725 776,661 684,624 557,673 12.01 10.71
INTEREST EXPENSE:
Deposits 335,708 337,878 413,880 411,560 370,216 285,835 (0.64) 3.27
Short-term borrowings 41,014 31,418 49,133 73,333 65,880 46,770 30.54 (2.59)
Long-term debt 21,021 13,634 11,440 13,436 14,051 12,691 54.18 10.62
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest expense 397,743 382,930 474,453 498,329 450,147 345,296 3.87 2.87
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest income 529,808 445,150 349,272 278,332 234,477 212,377 19.02 20.06
Provision for loan losses 45,032 43,305 38,042 44,635 21,166 19,097 3.99 18.72
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 484,776 401,845 311,230 233,697 213,311 193,280 20.64 20.19
NON-INTEREST INCOME:
Service charges on deposit accounts 76,716 63,894 49,379 39,435 31,896 28,422 20.07 21.97
Mortgage origination and
servicing fees 33,771 22,794 17,427 14,959 12,394 9,402 48.16 29.14
Trust fees 15,224 11,938 9,819 9,932 8,984 7,590 27.53 14.94
Miscellaneous fees 26,956 23,801 18,831 22,035 16,965 14,877 13.26 12.62
Securities gains, net 603 634 680 464 178 969 (4.89) (9.05)
Other 21,432 13,622 12,745 4,259 8,269 7,443 57.33 23.56
- ---------------------------------------------------------------------------------------------------------------------------------
Total non-interest income 174,702 136,683 108,881 91,084 78,686 68,703 27.82 20.52
NON-INTEREST EXPENSE:
Salaries and employee benefits 227,017 184,921 149,521 121,812 109,110 97,197 22.76 18.49
Net occupancy expense 36,775 32,254 25,273 18,514 15,830 14,196 14.02 20.97
Equipment expense 25,353 20,687 16,819 13,513 12,272 11,758 22.56 16.61
FDIC insurance 23,512 19,649 15,119 7,681 4,374 3,779 19.66 44.14
Other 122,294 116,125 90,064 73,193 58,561 51,774 5.31 18.76
- ---------------------------------------------------------------------------------------------------------------------------------
Total non-interest expense 434,951 373,636 296,796 234,713 200,147 178,704 16.41 19.47
- ---------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 224,527 164,892 123,315 90,068 91,850 83,279 36.17 21.94
Income tax expense 73,992 50,646 33,309 20,360 19,075 15,691 46.10 36.37
- ---------------------------------------------------------------------------------------------------------------------------------
Net income $150,535 $114,246 $ 90,006 $ 69,708 $ 72,775 $ 67,588 31.76 17.37
=================================================================================================================================
Average number of shares
outstanding (000s) 77,772 68,948 63,255 61,148 60,077 59,333
Net income per share $1.94 $1.66 $1.42 $1.14 $1.21 $1.14
Dividends declared per share 0.60 0.52 0.48 0.46 0.43 0.37
</TABLE>
39
<PAGE> 24
CONSOLIDATED STATEMENTS OF CONDITION
SouthTrust Corporation
<TABLE>
<CAPTION>
December 31
- ---------------------------------------------------------------------------------------------------------------
(In Thousands) 1993 1992
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 607,831 $ 540,548
Short-term investments:
Federal funds sold and securities purchased
under resale agreements 1,975 49,015
Interest-bearing deposits in other banks 47,651 50,484
Assets held for sale 258,506 198,759
- ---------------------------------------------------------------------------------------------------------------
Total short-term investments 308,132 298,258
Securities available for sale 2,454,760 0
Securities (Fair Value of $1,327,228 and
$3,841,289 in 1993 and 1992, respectively) 1,278,007 3,756,224
Loans 9,527,004 7,624,931
Less:
Unearned income 78,685 78,312
Allowance for loan losses 135,233 103,770
- ---------------------------------------------------------------------------------------------------------------
Net loans 9,313,086 7,442,849
Premises and equipment, net 321,623 269,937
Due from customers on acceptances 26,270 43,331
Other assets 398,255 363,250
- ---------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $14,707,964 $12,714,397
===============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Interest-bearing $ 9,732,460 $ 8,484,488
Other 1,782,851 1,597,753
- ---------------------------------------------------------------------------------------------------------------
Total deposits 11,515,311 10,082,241
Federal funds purchased and securities sold
under agreements to repurchase 1,207,026 1,181,654
Other short-term borrowings 249,434 149,426
Bank acceptances outstanding 26,270 43,331
Other liabilities 188,172 139,150
Long-term debt 469,985 258,243
- ---------------------------------------------------------------------------------------------------------------
Total liabilities 13,656,198 11,854,045
Stockholders' equity:
Preferred Stock, par value $1.00 a share:
5,000,000 shares authorized; issued and outstanding - none 0 0
Common Stock, par value $2.50 a share:
150,000,000 shares authorized; 79,735,663 shares issued
in 1993 and 74,798,690 in 1992 199,339 186,997
Capital surplus 215,113 155,504
Retained earnings 630,240 520,743
Unrealized gain on securities available for sale, net 10,218 0
Treasury stock at cost (334,980 shares in 1993 and
321,480 shares in 1992) (3,144) (2,892)
- ---------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,051,766 860,352
- ---------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $14,707,964 $12,714,397
===============================================================================================================
</TABLE>
See notes to Consolidated Financial Statements.
40
<PAGE> 25
CONSOLIDATED STATEMENTS OF INCOME
SouthTrust Corporation
<TABLE>
<CAPTION>
Year Ended December 31
- ---------------------------------------------------------------------------------------------------------------
(In Thousands, except per share data ) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $669,495 $561,757 $ 581,839
Interest on securities:
Taxable 217,555 221,692 193,297
Non-taxable 26,435 30,246 33,654
- ---------------------------------------------------------------------------------------------------------------
Total interest on securities 243,990 251,938 226,951
Interest on securities available for sale 0 0 0
Interest on short-term investments 14,066 14,385 14,935
- ---------------------------------------------------------------------------------------------------------------
Total interest income 927,551 828,080 823,725
- ---------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 335,708 337,878 413,880
Interest on short-term borrowings 41,014 31,418 49,133
Interest on long-term debt 21,021 13,634 11,440
- ---------------------------------------------------------------------------------------------------------------
Total interest expense 397,743 382,930 474,453
- ---------------------------------------------------------------------------------------------------------------
Net interest income 529,808 445,150 349,272
PROVISION FOR LOAN LOSSES 45,032 43,305 38,042
- ---------------------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 484,776 401,845 311,230
NON-INTEREST INCOME
Service charges on deposit accounts 76,716 63,894 49,379
Mortgage origination and servicing fees 33,771 22,794 17,427
Trust fees 15,224 11,938 9,819
Miscellaneous fees 26,956 23,801 18,831
Securities gains, net 603 634 680
Other 21,432 13,622 12,745
- ---------------------------------------------------------------------------------------------------------------
Total non-interest income 174,702 136,683 108,881
- ---------------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits 227,017 184,921 149,521
Net occupancy expense 36,775 32,254 25,273
Equipment expense 25,353 20,687 16,819
FDICinsurance 23,512 19,649 15,119
Other 122,294 116,125 90,064
- ---------------------------------------------------------------------------------------------------------------
Total non-interest expense 434,951 373,636 296,796
- ---------------------------------------------------------------------------------------------------------------
Income before income taxes 224,527 164,892 123,315
INCOME TAX EXPENSE 73,992 50,646 33,309
- ---------------------------------------------------------------------------------------------------------------
NET INCOME $150,535 $114,246 $ 90,006
===============================================================================================================
Average number of shares outstanding (000s) 77,772 68,948 63,255
Net income per share $1.94 $1.66 $1.42
Dividends declared per share 0.60 0.52 0.48
</TABLE>
See notes to Consolidated Financial Statements.
41
<PAGE> 26
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
SouthTrust Corporation
<TABLE>
<CAPTION>
Common Capital Retained Unrealized Treasury
(In Thousands) Stock Surplus Earnings Gain, net Stock Total
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1990 $153,630 $ 19,602 $378,644 0 ($2,303) $ 549,573
Net income 0 0 90,006 0 0 90,006
Dividends declared ($.48 per share) 0 0 (30,230) 0 0 (30,230)
Issuance of 40,431 shares of Common
Stock for stock options exercised 101 128 0 0 0 229
Issuance of 77,573 shares of Common
Stock under dividend reinvestment
and stock purchase plan 194 680 0 0 0 874
Issuance of 55,278 shares of Common
Stock under employee discounted stock
purchase plan 138 221 0 0 0 359
Issuance of 13,049 shares of Common Stock for
conversion of debentures 33 38 0 0 0 71
Issuance of 1,125,000 shares of Common Stock
through private placement 2,813 12,921 0 0 0 15,734
Issuance of 3,279,375 shares of Common Stock
through public offering 8,198 26,479 0 0 0 34,677
Issuance of 86,265 shares of Common Stock
for acquisition of subsidiary minority interest 215 596 0 0 0 811
Purchase of 8,028 shares of treasury stock 0 0 0 0 (104) (104)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1991 $165,322 $ 60,665 $438,420 $ 0 ($2,407) $ 662,000
Net income 0 0 114,246 0 0 114,246
Dividends declared ($.52 per share) 0 0 (35,743) 0 0 (35,743)
Issuance of 708,920 shares of Common
Stock for stock options exercised 1,773 2,912 0 0 0 4,685
Issuance of 111,990 shares of Common
Stock under dividend reinvestment and
stock purchase plan 280 1,557 0 0 0 1,837
Issuance of 21,737 shares of Common
Stock under employee discounted
stock purchase plan 55 247 0 0 0 302
Issuance of 7,350 shares of Common
Stock for conversion of debentures 18 22 0 0 0 40
Issuance of 4,571,250 shares of Common
Stock through public offering 11,428 59,972 0 0 0 70,400
Pooling-of-interests with Carolina Financial
Corporation; 1,317,306 shares issued 3,293 5,218 3,820 0 0 12,331
Issuance of 1,931,211 shares of Common
Stock for acquisition of subsidiaries 4,828 25,911 0 0 0 30,739
Purchase of 28,898 shares of treasury stock 0 0 0 0 (485) (485)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1992 $186,997 $155,504 $520,743 $ 0 ($2,892) $ 860,352
Net income 0 0 150,535 0 0 150,535
Dividends declared ($.60 per share) 0 0 (46,213) 0 0 (46,213)
Issuance of 194,377 shares of Common
Stock for stock options exercised 486 1,394 0 0 0 1,880
Issuance of 124,930 shares of Common
Stock under dividend reinvestment
and stock purchase plan 312 2,059 0 0 0 2,371
Issuance of 29,059 shares of Common
Stock under employee discounted stock
purchase plan 73 378 0 0 0 451
Pooling-of-interests with County Bancshares,
Inc.; 562,500 shares issued 1,406 407 4,801 0 0 6,614
Pooling-of-interests with
Commercial Bancorporation, Inc.;
578,262 shares issued 1,445 4,511 374 0 0 6,330
Issuance of 3,447,845 shares of Common
Stock for acquisition of subsidiaries 8,620 50,860 0 0 0 59,480
Unrealized gain, net, on assets available for sale 0 0 0 10,218 0 10,218
Purchase of 13,500 shares of treasury stock 0 0 0 0 (252) (252)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1993 $199,339 $215,113 $630,240 $10,218 ($3,144) $1,051,766
==================================================================================================================================
</TABLE>
See notes to Consolidated Financial Statements.
42
<PAGE> 27
CONSOLIDATED STATEMENTS OF CASH FLOWS
SouthTrust Corporation
<TABLE>
<CAPTION>
Year Ended December 31
- ---------------------------------------------------------------------------------------------------------------
(In Thousands) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 150,535 $ 114,246 $ 90,006
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision (credit) for:
Loan losses 45,031 43,305 38,042
Depreciation of premises and equipment 21,431 16,608 13,263
Amortization of intangibles 16,419 12,928 9,686
Amortization of security premium 10,069 9,048 665
Accretion of security discount (12,035) (9,449) (3,141)
Deferred income tax (3,313) (185) (3,564)
Net realized and unrealized gain on assets held for sale (9,874) (6,590) (4,956)
Net securities (gains) losses (603) (634) (680)
Origination and purchase of loans held for sale (945,869) (945,897) (403,003)
Proceeds of loans held for sale 898,534 847,941 384,820
Net (increase) decrease in trading securities (2,538) 11,114 1,938
Net (increase) decrease in other assets (8,935) 17,955 4,628
Net increase (decrease) in other liabilities 30,048 (27,585) 10,562
- ---------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 188,900 82,805 138,266
INVESTING ACTIVITIES
Proceeds from maturities of securities 2,174,346 1,245,274 428,882
Proceeds from sales of securities 25,686 14,210 23,571
Payments for purchases of:
Securities (1,836,402) (1,851,540) (927,579)
Premises and equipment (29,636) (46,065) (36,729)
Net (increase) decrease in:
Short-term investments 111,559 (26,940) 39,119
Loans (1,206,850) (727,560) (387,854)
Purchase of subsidiaries, net of cash acquired 76,825 412,818 719,586
- ----------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (684,472) (979,803) (141,004)
FINANCING ACTIVITIES
Proceeds from issuance of:
Common Stock 4,696 120,334 51,873
Long-term debt 200,000 100,000 0
Payments for:
Long-term debt (84,959) (2,689) (8,517)
Repurchase of Common Stock Cash Divedends (252) (485) (104)
Net increase (decrease) in: (52,124) (34,118) (29,542)
Deposits 382,378 449,620 30,924
Short-term borrowings 113,116 373,691 (14,575)
- ----------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 562,855 1,006,353 30,059
- ----------------------------------------------------------------------------------------------------------------
INCREASE IN CASH AND DUE FROM BANKS 67,283 109,355 27,321
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR 540,548 431,193 403,872
- ----------------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF YEAR $ 607,831 $ 540,548 $ 431,193
================================================================================================================
</TABLE>
See notes to Consolidated Financial Statements.
43
<PAGE> 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SouthTrust Corporation
NOTE A - ACCOUNTING POLICIES
The significant accounting policies followed by SouthTrust Corporation and its
subsidiaries ("the Company") and the method of applying those policies are
summarized below:
CONSOLIDATION
The Consolidated Financial Statements include accounts of the Company and its
subsidiaries. All significant inter-company transactions have been eliminated
in preparing the Consolidated Financial Statements.
Certain amounts in the 1991 and 1992 financial statements have been
reclassified to conform to the 1993 presentation. Such reclassification had no
effect on net income or total assets.
SECURITIES
On December 31, 1993, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." In adopting SFAS No. 115, securities have been classified
as either trading, available for sale or held to maturity based on Management's
current intent.
Securities classified as trading are intended to be sold in the near term.
Trading securities are carried at fair value and unrealized gains and losses
are included in earnings. Securities designated as available for sale are
carried at fair value. The unrealized difference between amortized cost and
fair value on securities available for sale is excluded from earnings and is
reported net of deferred taxes as a component of stockholders' equity. This
caption includes securities that Management intends to use as part of its
asset/liability management strategy; or that may be sold in response to changes
in interest rates, changes in prepayment risk, liquidity needs, or for other
purposes. Securities classified as held to maturity are carried at amortized
cost, as the Company has the ability and positive intent to hold these
securities to maturity. Initial adoption of SFAS No. 115 had the effect of
increasing shareholders' equity by $10,218,000 at December 31, 1993; it had no
effect on 1993 income.
Amortization of premium and accretion of discount are computed under the
interest method. The adjusted cost of the specific certificate sold is used to
compute gain or loss on the sale of securities.
Prior to adoption of SFAS No. 115, securities determined to be held on a
long-term basis or until maturity were accounted for in a manner similar to
securities held to maturity. Securities intended to be sold in the near term
were classified as trading.
ASSETS HELD FOR SALE
Assets held for sale consist primarily of mortgage loans in the process of
being sold to third-party investors and are carried at the lower of cost or
fair value. Also included in this caption at December 31, 1993 and 1992 are
trading securities of $15,474,000 and $10,670,000, respectively, carried at
fair value.
LOANS
Interest is credited to income based upon the principal amount outstanding. The
net amount of non-refundable loan origination fees and costs associated with
the lending process, including commitment fees, are deferred and amortized to
interest income over the lives of the loans using a method that approximates
the level-yield method. If loan commitments expire, income is recognized upon
expiration of the commitment. Interest accrual on loans is generally stopped
if principal or interest payments become 90 days past due or Management
considers the collectibility of principal or interest to be in question. When
a loan is placed on non-accrual status, interest income credited in the
current year is reversed by a charge to income.
OTHER REAL ESTATE
Other real estate includes foreclosed properties and loans in which conditions
indicate that substantive repossession of the property has occurred. Such
properties are carried at the lower of the recorded investment in the loan or
fair value of the foreclosed properties less estimated selling costs. The
recorded investment is the sum of the outstanding principal loan balance plus
any accrued interest that has not been received and acquisition costs
associated with the property. Any excess of the recorded investment over the
fair value of the property received at the time of foreclosure is charged to
allowance for loan losses. Any subsequent write-downs are charged against other
non-interest expenses. Revenues and expenses associated with operating or
disposing of foreclosed properties are recorded during the period in which they
are incurred.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is maintained at a level that Management
considers to be adequate to absorb losses inherent in the loan portfolio.
Management's estimation of the amount of the allowance is based on a continuing
evaluation of the loan portfolio and includes such factors as economic
conditions, analysis of individual loans, and overall portfolio characteristics
and delinquencies. Changes in the allowance can result from changes in economic
events or changes in the credit worthiness of the borrowers. The effect of
these changes is reflected when known. The amount of the allowance is
maintained through the provision for loan losses.
During 1993, The Financial Accounting Standards Board issued SFAS No. 114 -
"Accounting by Creditors for Impairment of a Loan," which is effective for
fiscal years beginning after December 15, 1994. SFAS No. 114 requires that
impaired loans be valued based
44
<PAGE> 29
on the present value of those loans' estimated cash flows at each loans
effective interest rate or the fair value of the collateral. Management is
still evaluating the potential impact of adoption of this statement.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are computed principally on the
straight-line method over the estimated useful lives of the assets.
INCOME TAXES
Effective January 1, 1993, the Company adopted SFAS No. 109,
"Accounting for Income Taxes," which changed the method of accounting for
income taxes from the deferral to the asset and liability method. The effect of
adopting SFAS No. 109 did not have a significant impact on the 1993
Consolidated Financial Statements nor was the cumulative effect of the change
material. Prior to adopting SFAS No. 109, the Company accounted for income
taxes in accordance with Accounting Principles Board Opinion ("APB") No. 11.
During 1993, the statutory federal income tax rate was increased from 34% to
35%. In accordance with SFAS No. 109, deferred tax assets and liabilities are
measured and recorded using the currently effective tax rate. The increase from
34% to 35% in 1993 did not have a significant impact on income tax expense.
The Consolidated Financial Statements have been prepared on an accrual
basis. Because some income and expense items are recognized in different
periods for financial reporting purposes and for purposes of computing
currently payable income taxes, a provision or credit for deferred income taxes
is made for such temporary differences.
INTEREST RATE SWAP CONTRACTS
The Company entered into interest rate swap contracts as a means of balancing
interest rate risk. The interest differential applicable to interest rate
swaps, which hedge specific liabilities, is accrued over the lives of the
contracts and reported as an adjustment to interest expense. Fees on interest
rate swaps are deferred and amortized over the term of the contracts. Gains on
terminated contracts are recognized as rate adjustments of the underlying
liabilities over the remaining original term of the contract.
EARNINGS PER SHARE AND DIVIDENDS
Earnings per share are based on the weighted-average number of shares of Common
Stock outstanding, excluding treasury stock, and dividends declared per share
reflect the actual dividend rate of the Company. Total dividends declared
during the year are based on shares outstanding, excluding treasury shares.
OTHER ASSETS
Goodwill is amortized on a straight-line basis, primarily over 15-25 years.
Goodwill resulting from business combinations prior to July 25, 1991, is not
deductible for federal income tax purposes. Certain goodwill, primarily
resulting from business combinations not effected through a tax-free exchange
of stock, acquired subsequent to July 25, 1991, is deductible over a 15-year
period. Intangible assets attributable to core deposits purchased is amortized
over the estimated life of the deposit base, not to exceed 10 years. Core
deposit intangible assets are amortized on the double-declining balance
method.
The cost of mortgage servicing rights purchased and the value of servicing
fees in excess of normal servicing fees is being amortized over the estimated
lives of the related servicing contracts by a method which approximates a
constant rate of return on the servicing assets. The recoverabilities of the
intangible assets are monitored, and are adjusted appropriately for any
impairment of the underlying assets.
STATEMENTS OF CASH FLOWS
The Company includes cash, due from banks, and certain cash items, as cash
equivalents in preparing the Statement of Cash Flows.
The following is supplemental disclosure to the statements of cash
flows for the three years ended December 31, 1993:
<TABLE>
<CAPTION>
(In Thousands)
Cash paid during Year Ended
the period for: 1993 1992 1991
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest $412,150 $389,561 $476,905
Income taxes 69,380 52,195 32,165
Non-cash transactions:
Assets acquired
in business
combinations 1,260,582 1,489,414 1,033,820
Liabilities assumed
in business
combinations 1,176,535 1,445,090 1,033,820
Loans transferred to
Other Real Estate 18,667 18,414 19,637
Loans securitized into
mortgage-backed
securities 636,626 637,832 329,833
- --------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE> 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
SouthTrust Corporation
NOTE B - BUSINESS COMBINATIONS
During 1993 the Company completed the following acquisitions:
<TABLE>
<CAPTION>
(In Millions)
Date Institution Assets Loans Deposits Locations
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
February 17 Prime Bancshares, Inc. ("Prime") $ 625.6 $335.9 $ 484.3 Atlanta, GA
May 7 Gulf Harbor Banks, Inc. ("Gulf Harbor") 39.7 24.3 32.8 Dunedin, FL
July 22 Federal Trust Bank - 1 branch 19.2 24.6 19.2 Amelia Island, FL
July 26 First Federal Savings & Loan of Russell County - 1 branch 7.7 0.2 7.7 Abbeville, AL
August 13 County Bancshares, Inc. ("County") 81.8 43.9 74.5 Troy, AL
September 1 Central National Bank ("Central National") 42.0 21.9 38.6 Sarasota, FL
September 24 First South Savings Bank - 1 branch 14.8 0.0 14.6 Columbia, SC
November 5 First Federal Savings of Winder - 1 branch 13.5 0.2 13.4 Winder, GA
November 22 Intercontinental Bank - 1 branch 19.0 12.5 17.1 Orlando, FL
November 29 Commercial Bancorporation, Inc. ("Commercial") 73.0 50.9 64.6 Orlando, FL
December 3 Anchor Savings Bank - 2 branches 48.2 0.2 48.1 St. Augustine and
Fernandina Beach, FL
December 10 Cypress Banks, Inc. ("Cypress") 112.6 82.4 96.6 Wesley Chapel, FL
December 15 BMR Financial Group, Inc. ("BMR") 93.0 48.7 77.8 Winter Garden and
Clearwater, FL
December 30 Gulf & Southern Financial Corporation ("Gulf & Southern") 70.5 53.9 61.4 Ft. Myers, FL
- -----------------------------------------------------------------------------------------------------------------------------
TOTALS $1,260.6 $699.6 $1,050.7
=============================================================================================================================
</TABLE>
The acquisitions of the Federal Trust branch, First South Savings Bank, the
First Federal Savings and Loan branch, First Federal Savings of Winder, the
Intercontinental branch, and the Anchor Savings branches were accounted for as
purchases of assets and assumptions of liabilities. The acquisitions of all of
the outstanding shares of Prime, Gulf Harbor, Central National, Cypress, BMR,
and Gulf and Southern were accounted for as purchases. Under purchase
accounting, the results of operations of all of the above, subsequent to the
respective acquisition dates, are included in the Consolidated Financial
Statements.
Consideration given in all purchase transactions (including purchase and
assumption transactions) aggregated approximately $35.2 million in cash and
3,447,845 shares of SouthTrust Corporation Common Stock valued at $59.4
million. Total intangible assets recognized in these transactions were
approximately $35.0 million.
The acquisitions of County and Commercial were accounted for as
poolings-of-interest; however, the Company's previously reported consolidated
financial results have not been restated to include the effect of the
acquisitions prior to their respective acquisition dates, since the effect is
not material. In these transactions, approximately 1,140,762 shares of
SouthTrust Corporation common stock were exchanged for all outstanding shares
of County and Commercial.
During 1992, the Company completed seven acquisitions with aggregate total
assets of $1,489.4 million, total deposits of $1,355.5 million, and loans of
$871.2 million.
Assuming the 1993 acquisitions of Prime, Gulf Harbor, County, Central
National, Commercial, Cypress, BMR, and Gulf and Southern, and the 1992
acquisitions of Colony and CK Federal (included in the 1992 aggregate above)
had occurred on January 1, 1992, the consolidated results of operations on a
pro forma basis for 1993 and 1992 would have been approximately as follows
(unaudited):
<TABLE>
<CAPTION>
(In Thousands except per share data) 1993 1992
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Net interest income $549,851 $496,872
Net income 148,694 112,831
Net income per share 1.86 1.50
- ----------------------------------------------------------------------------------------
</TABLE>
The pro forma effect of the purchase and assumption transactions is not
presented since the results of the acquired operations differ substantially
from the historical results of the sellers and, therefore, the pro forma
results would not be meaningful.
The Company has entered into five separate definitive agreements and two
separate letters of intent to acquire financial institutions with aggregate
total assets of approximately $585 million. These pending acquisitions are
subject to shareholder and/or various regulatory approvals among other
conditions and are expected to close around mid-1994. The aggregate purchase
price of all pending acquisitions is approximately $21.1 million in cash and
approximately 1.6 million shares of SouthTrust Corporation common stock.
46
<PAGE> 31
NOTE C - REGULATORY REQUIREMENTS
AND RESTRICTIONS ON CERTAIN ASSETS
The Company's banking subsidiaries are required either by law or regulation to
maintain reserves with the Federal Reserve Bank or in accounts with other
banks. The average amount of reserve balances for the year ended December 31,
1993, was approximately $167,650,000.
At December 31, 1993 and 1992, investment securities with a par value of
$1,966,070,000 and $2,029,765,000, respectively, were pledged to secure public
deposits, securities sold under agreements to repurchase, and for other
purposes.
The primary source of funds available to the Company is payment of
dividends from the Company's subsidiaries. Banking laws and other regulations
limit the amount of dividends a bank subsidiary may pay without prior
regulatory approval. At December 31, 1993, $269,800,926 of the net assets of
subsidiaries was available for payment without prior regulatory approval.
Substantially all other net assets of the Company's subsidiaries were
restricted as to payments to the Company.
The Company and its subsidiary banks are required by the various depository
institution regulatory agencies to maintain certain capital-to-asset ratios. At
December 31, 1993, all such ratios were above the prescribed minimums.
NOTE D - SECURITIES AND SECURITIES AVAILABLE FOR SALE
The carrying amount, gross gains and losses, and approximate fair value at
December 31, 1993, are as follows:
<TABLE>
<CAPTION>
Held to Maturity
-----------------------------
1993 1992
- ---------------------------------------------------------------------------------------------------------------------------------
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
(In Thousands) Cost Gross Gain Gross Loss Value Cost Gross Gain Gross Loss Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury
securities $ 6,077 $ 8 $ 0 $ 6,085 $ 458,653 $ 6,962 $ 4 $ 465,611
U.S. Government
agency securities 349,237 3,856 283 352,810 587,686 10,501 919 597,268
Mortgage-backed
securities 443,558 14,240 332 457,466 2,164,131 43,614 3,445 2,204,300
Obligations of
states and political
subdivisions 356,402 28,075 31 384,446 389,976 23,281 257 413,000
Other securities 122,733 3,688 0 126,421 155,778 5,696 364 161,110
- ---------------------------------------------------------------------------------------------------------------------------------
Total $1,278,007 $49,867 $646 $1,327,228 $3,756,224 $90,054 $4,989 $3,841,289
=================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Available for Sale
-------------------------------------------
1993
-------------------------------------------
Amortized Unrealized Unrealized Fair
(In Thousands) Cost Gross Gain Gross Loss Value
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury
securities $ 648,331 $ 3,676 $ 103 $ 651,904
U.S. Government
agency securities 398,590 9,235 571 407,254
Mortgage-backed
securities 1,318,424 5,542 1,942 1,322,024
Obligations of
states and
political subdivisions - - - -
Other securities 73,054 612 88 73,578
- ---------------------------------------------------------------------------------
Total $2,438,399 $19,065 $2,704 $2,454,760
=================================================================================
</TABLE>
The carrying amounts and approximate fair value of securities at December 31,
1993, by contractual maturity, are shown below:
<TABLE>
<CAPTION>
Held to Maturity Available for Sale
- --------------------------------------------------------------------------------------------------
Amortized Fair Amortized Fair
(In Thousands) Cost Value Cost Value
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Due in one year or less $ 48,085 $ 48,629 $ 500,028 $ 504,467
Due after one year through five years 491,324 502,725 777,634 787,312
Due after five years through 10 years 327,593 345,782 339,406 340,908
Due after 10 years 411,005 430,092 821,331 822,073
- --------------------------------------------------------------------------------------------------
Total $1,278,007 $1,327,228 $2,438,399 $2,454,760
==================================================================================================
</TABLE>
Proceeds from sales of securities during 1993 were $25,686,000. Gross gains of
$1,006,000 and gross losses of $403,000 were realized on those sales. Proceeds
from sales of securities during 1992 were $14,210,000. Gross gains of $803,000
and gross losses of $169,000 were realized on those sales.
The income tax provision applicable to securities tranactions for the years
1993, 1992, and 1991 were $226,000, $231,000, and $252,000, respectively.
47
<PAGE> 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
SouthTrust Corporation
NOTE E - LOANS
The classifications of loans at December 31 are as follows:
<TABLE>
<CAPTION>
(In Thousands) 1993 1992
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial, financial and agricultural $ 2,814,106 $ 2,378,014
Real estate construction 448,619 332,541
Commercial real estate mortgage 2,594,453 2,026,569
Residential real estate mortgage 2,322,088 1,736,610
Loans to individuals 1,347,738 1,151,197
- ---------------------------------------------------------------------------------------------------------------
9,527,004 7,624,931
Unearned interest (78,685) (78,312)
Allowance for loan losses (135,233) (103,770)
- --------------------------------------------------------------------------------------------------------------
Net Loans $ 9,313,086 $ 7,442,849
==============================================================================================================
</TABLE>
In the normal course of business, loans are made to directors and executive
officers of the Company and its subsidiaries and their associates. These loans
are made on substantially the same terms, including interest rates and
collateral, as those prevailing for comparable transactions with others. Such
loans do not involve more than normal risk of collectibility nor do they
present other unfavorable features. As of December 31, 1993 and 1992,
respectively, $127,393,000 and $53,474,000 of these loans were outstanding.
During 1993, $241,404,000 of new loans were made and repayments totaled
$167,485,000.
The Company's largest credit concentration is commercial real estate
mortgage loans, which totaled $2,594.5 million or 27.2% of total loans at
December 31, 1993 and $2,026.6 million or 26.6% of total loans at December 31,
1992. There were no significant industry concentrations within the loan
portfolio and the Company's geographic loan distribution is concentrated in the
Southeast markets served by the Company at December 31, 1993 and 1992.
In 1993, interest income of $1,705,000 and $36,000 was recorded on
non-accrual and restructured loans, respectively. Had income on these loans
been recorded under original terms, $7,337,000 of interest on non-accrual loans
and $59,000 of interest on restructured loans would have been recorded.
NOTE F - ALLOWANCE FOR LOAN LOSSES
The following is an analysis of changes in the allowance for loan losses for
the years ended December 31:
<TABLE>
<CAPTION>
(In Thousands) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year $103,770 $ 80,393 $70,812
Additions (deductions):
Provisions charged to operations 45,032 43,305 38,042
Recoveries on loans previously charged off 12,005 8,524 9,895
Loans charged off (36,620) (40,062) (41,586)
Allowances of purchased subsidiaries 11,046 11,610 3,230
- ---------------------------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $135,233 $103,770 $80,393
===============================================================================================================
</TABLE>
NOTE G - PREMISES AND EQUIPMENT
The following is a summary of premises and equipment at December 31:
<TABLE>
<CAPTION>
(In Thousands) 1993 1992
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Land $ 84,913 $ 71,099
Buildings and improvements 213,499 175,106
Equipment 160,108 132,680
- ---------------------------------------------------------------------------------------------------------------
458,520 378,885
Less accumulated depreciation and amortization 136,897 108,948
- ---------------------------------------------------------------------------------------------------------------
TOTALS $321,623 $269,937
==============================================================================================================
</TABLE>
48
<PAGE> 33
NOTE H - LONG-TERM DEBT
A summary of long-term debt at December 31 follows:
<TABLE>
<CAPTION>
(In Thousands) 1993 1992)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
8-5/8% Subordinated notes, due May 15, 2004 $100,000 $100,000
7% Debentures, due May 15, 2003 100,000 0
8-3/4% Senior Notes, due December 15, 1997 0 9,110
8-1/2% Debentures, due November 1, 2003 0 21,673
9.95% Subordinated Capital Notes, due June 1, 1999 75,000 75,000
Floating Rate Notes, due December 28, 1994,
average rate of 3.85% in 1993 and 4.15% in 1992 20,000 20,000
9.08% Senior Notes, due March 28, 1995 10,000 10,000
Federal Home Loan Bank advances 145,849 20,750
Other 19,136 1,710
- --------------------------------------------------------------------------------------------------------------
TOTALS $469,985 $258,243
==============================================================================================================
</TABLE>
During 1993 the Company issued $100,000,000 in 7% Debentures due in 2003.
These notes, along with the 8-5/8% Subordinated Notes, are not subject to
redemption prior to maturity, and no sinking fund is required for them.
The 8-3/4% Senior Notes and the 8-1/2% Debentures were redeemed in 1993.
The 9.95% Subordinated Capital Notes qualify as supplemental capital under
the Capital Adequacy Guidelines of the Federal Reserve Board. These notes will
be redeemed, at the Company's option, in cash from the proceeds of the sale of
capital securities, or exchanged for qualifying capital securities, having a
market value equal to the principal amount of the notes. These notes are
unsecured and subordinated to all present and future senior indebtedness of the
Company. These notes may not be redeemed prior to maturity, except upon the
occurrence of certain events relating to the federal income tax treatment of
the notes by the Company.
$140.1 million of the Federal Home Loan Bank Advances are at variable
rates. $5.7 million are at fixed rates ranging from 5.80% to 8.10%.
Scheduled maturities of long-term debt in 1994 are approximately $109.0
million. Maturities during 1995, 1996, 1997, and 1998 are approximately $35.0
million, $29.0 million, $0.8 million, and $2.0 million, respectively.
NOTE I - COMMITMENTS
AND CONTINGENCIES
LITIGATION
Several of the Company's subsidiaries are defendants in various legal
proceedings arising in the normal course of business. These claims relate to
the lending and investment advisory services provided by the Company and
include alleged compensatory and punitive damages. Although it is not possible
to determine, with any certainty, the potential exposure related to punitive
damages, in the opinion of Management, based upon consultation with legal
counsel, the ultimate resolution of these proceedings will not have a material
effect on the Company's financial statements.
LEASES
At December 31, 1993, the Company and its subsidiaries were obligated under
various cancelable and non- cancelable leases for premises and equipment.
Certain leases contain various renewal options that are priced at market rates.
Total rental expense for the years ended December 31, 1993, 1992, and 1991 was
$14,476,000, $13,262,000, and $10,517,000, respectively. Future minimum rental
commitments as of December 31, 1993 for all non-cancelable leases with initial
or remaining terms of more than one year are as follows:
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
(In Thousands) Premises Equipment Total
- -----------------------------------------------------
<S> <C> <C> <C>
1994 $ 16,455 $133 $ 16,588
1995 15,353 48 15,401
1996 13,637 30 13,667
1997 12,181 30 12,211
1998 10,915 13 10,928
After 1998 64,899 0 64,899
- -----------------------------------------------------
TOTALS $133,440 $254 $133,694
=====================================================
</TABLE>
OFF-BALANCE-SHEET COMMITMENTS
STANDBY LETTERS OF CREDIT AND COMMITMENTS
The Company's subsidiary banks had standby letters of credit outstanding of
approximately $347,767,000 and $290,247,000 at December 31, 1993 and 1992,
respectively.
The Company's subsidiary banks had outstanding commitments to extend credit
of approximately $3,160,560,000 at December 31, 1993, and $2,393,357,009 at
December 31, 1992. Since many
49
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
SouthTrust Corporation
of the commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements.
The Company's policies as to collateral and assumption of credit risk for
off-balance-sheet commitments are essentially the same as those for extension
of credit to its customers.
ASSETS SOLD WITH RECOURSE
The Company's subsidiaries regularly originate and sell loans, consisting
primarily of mortgage loans sold to third-party investors, which contain
various recourse provisions to the seller. Losses historically realized through
the repurchase or other satisfaction of these recourse provisions are
insignificant.
INTEREST RATE SWAPS
The Company has entered into interest rate swap agreements ("Swaps"), which
provide for the Company to pay interest based on the Floating London Interbank
Offered Rate while receiving payments on a fixed rate. The average notional
face amount of these agreements was $413 million in 1993 and $179 million in
1992. The notional amounts outstanding at December 31, 1993 and 1992 were $490
million and $230 million, respectively. New Swaps in 1993 amounted to $260
million; no Swaps expired or were terminated in 1993. During 1993, the average
rate paid under the agreements was 3.38% and the average rate earned was 6.31%.
For 1992, the average rate paid was 3.88% and the average rate earned was
7.24%.
The contractual maturities of Swaps are as follows:
<TABLE>
<CAPTION>
(In Millions) Notional Amount Expiration
- -------------------------------------------------------------------------------------
<S> <C>
$ 290.0 1995
100.0 2003
100.0 2004
- -------------------------------------------------------------------------------------
$ 490.0
=====================================================================================
</TABLE>
NOTE J - EMPLOYEE BENEFITS
DEFINED BENEFIT PLANS
The Company has a trusteed defined benefit pension plan for the benefit of
substantially all employees of the Company and its subsidiaries, the "Trusteed
Plan." The Company also maintains a supplemental defined benefit plan, the
"Supplemental Plan," and a deferred compensation plan, the "Deferred Plan," for
certain key executives. The Company's funding policy with respect to the
Trusteed Plan is to contribute amounts to the plan sufficient to meet minimum
funding requirements as set by law. The Supplemental Plan and the Deferred Plan
are unfunded.
The weighted-average discount rate and rate used in determining the
actuarial present value of the projected benefit obligations for all defined
benefit plans was 7.5% in 1993 and 8.5% in 1992 and 1991. The rate of increase
in future compensation levels for all defined benefit plans was 5.5% in 1993 and
6% in 1992 and 1991.The rate of expected return on plan assets for the Trusteed
Plan in 1993, 1992, and 1991 was 9.25%. Prior service costs for all defined
benefit plans are being amortized on a straight-line basis.
The Company also maintains a defined contribution deferred profit sharing
plan that meets the requirements of section 401(k) of the Internal Revenue
Code. Company contributions to the deferred profit sharing plan are based on a
pre-determined formula of up to 15% of participants' salaries, which is the
maximum amount deductible for federal income tax purposes. Provisions for
contributions to the deferred profit sharing plan were approximately $10.5
million in 1993, $8.4 million in 1992, and $7.6 million in 1991.
As of December 31, 1993, the Trusteed Plan and the profit sharing plan owned
411,768 shares and 1,403,719 shares, respectively, of the Company's common
stock.
STOCK OPTION PLAN
Stock options for a total of 1,179,344 shares awarded to key employees under
the Company's Stock Option Plan were outstanding at December 31, 1993. Exercise
prices range from $4.33 to $18.75 per share and average $11.01 per share.
During 1993, options on 194,377 shares were exercised at an average price of
$9.67 per share while options for 952,539 shares were exercisable as of
December 31, 1993.
50
<PAGE> 35
NOTE J - EMPLOYEE BENEFITS (Continued)
TRUSTEED PLAN
The following table sets forth the plan's funded status and amounts recognized
in the Company's Consolidated Financial Statements at December 31, 1993 and
1992, and for each of the three years in the period ended December 31, 1993:
<TABLE>
<CAPTION>
(In Thousands) 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits
of $36,704 in 1993 and $25,873 in 1992 ($43,019) ($ 28,689)
===================================================================================================================================
Projected benefit obligation for service rendered to date ($53,184) ($ 38,863)
Plan assets at fair value, primarily listed stocks and U.S. Government securities 53,331 49,899
- -----------------------------------------------------------------------------------------------------------------------------------
Plan assets in excess of projected benefit obligation 147 11,036
Unrecognized net (gain) loss from past experience different from that assumed
and effects of changes in assumptions 3,355 (5,816)
Prior service cost not yet recognized in net periodic pension cost 437 483
Unrecognized net asset at January 1, 1993 and 1992 (4,682) (5,204)
- -----------------------------------------------------------------------------------------------------------------------------------
Prepaid (accrued) pension cost included in other assets (liabilities) ($ 743) $ 499
===================================================================================================================================
</TABLE>
Net pension cost for 1993, 1992, and 1991 includes the following components:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 2,961 $ 2,311 $ 1,920
Interest cost on projected benefit obligation 3,451 2,931 2,609
Actual return on plan assets (3,734) (2,745) (12,163)
Net amortization and deferral (1,426) (2,412) 8,241
- -----------------------------------------------------------------------------------------------------------------------------------
Net periodic pension cost $ 1,252 $ 85 $ 607
===================================================================================================================================
</TABLE>
SUPPLEMENTAL AND DEFERRED PLANS
The following table sets forth the plans' funded status and amounts recognized
in the Company's Consolidated Financial Statements at December 31, 1993 and
1992, and for each of the three years ended December 31, 1993:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In Thousands) 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits of $2,904 in 1993 and $3,449 in 1992 ($3,166) ($3,649)
===================================================================================================================================
Projected benefit obligation for service rendered to date ($4,209) ($3,733)
Plan assets at fair value 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Excess of projected benefit obligation over plan assets (4,209) (3,733)
Unrecognized net (gain) loss from past experience different from that assumed
and effects of changes in assumptions 571 48
Prior service cost not yet recognized in net periodic pension cost 848 1,530
Unrecognized net (asset) liability at January 1, 1993 and 1992 (804) (1,494)
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued pension cost included in other liabilities ($3,594) ($3,649)
===================================================================================================================================
</TABLE>
Net pension cost for 1993, 1992 and 1991 includes the following components:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $344 $ 310 $ 57
Interest cost on projected benefit obligation 274 272 110
Net amortization and deferral 150 215 60
- -----------------------------------------------------------------------------------------------------------------------------------
Net periodic pension cost $768 $ 797 $ 227
===================================================================================================================================
</TABLE>
POSTRETIREMENT BENEFITS
The Company sponsors an unfunded defined benefit postretirement health care
plan. All employees who retire under the plan at age 55 or later with 10 or
more years of service are eligible to receive certain limited postretirement
health care benefits until age 65. The plan is identical to the specific
medical plan covering the employee prior to retirement. The plan is
contributory, with retiree contributions adjusted annually.
51
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
SouthTrust Corporation
Net postretirement health care cost for 1993 and 1992 includes the following
components:
<TABLE>
<CAPTION>
(In Thousands) 1993 1992
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Service cost - benefits attributed to service during the period $220 $220
Interest cost on accumulated postretirement benefit obligation 215 215
Amortization of transition obligation over 20 years 106 131
- --------------------------------------------------------------------------------------------------------------
Net periodic postretirement benefit costs $541 $566
===============================================================================================================
</TABLE>
For measurement purposes, a 14% and 15% annual rate of increase in the per
capita cost of covered health care claims was assumed for 1993 and 1992,
respectively; the rate was assumed to remain stable for four years, then
decrease to 7% for years thereafter. The health care cost trend rate assumption
has a significant effect on the amounts reported. Increasing the assumed health
care cost trend rates by one percentage point in each year would increase the
accumulated postretirement benefit obligation as of December 31, 1993, by
$742,000 and the aggregate of the components of net periodic postretirement
benefit cost for the year then ended by $168,000. The weighted-average discount
rate used in determining the accumulated postretirement benefit obligation was
8.5% in 1993 and 1992.
In 1992, the Company adopted SFAS No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions." This new standard requires that
the expected cost of these postretirement benefits must be charged to expense
during the years that the employees render service. The Company has elected to
amortize the unfunded transition obligation over a 20-year period as permitted
by the standard. The effect of this change in accounting was to decrease pretax
income by $541,000 in 1993 and $566,000 in 1992. Previously the Company
recognized postretirement health care costs in the year the benefits were paid.
Postretirement health care costs charged to expense in 1991 were not material.
The plan's accumulated postretirement benefit obligation was $2,969,000 at
December 31, 1993, with $573,000 related to retirees and $2,396,000 for other
active employees, and an unrecognized transition obligation of $2,005,000,
resulting in an accrued liability of $964,000.
NOTE K - INCOME TAXES
The provision for income taxes was as follows:
<TABLE>
<CAPTION>
Year Ended December 31
(In Thousands) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $69,392 $43,889 $31,598
State 7,913 6,942 5,275
- --------------------------------------------------------------------------------------------------------------
77,305 50,831 36,873
Deferred (Prepaid):
Federal (3,753) 368 (3,189)
State 440 (553) (375)
- --------------------------------------------------------------------------------------------------------------
(3,313) (185) (3,564)
- ---------------------------------------------------------------------------------------------------------------
TOTALS $73,992 $50,646 $33,309
===============================================================================================================
</TABLE>
The components of deferred taxes resulting from timing differences in the
recognition of income and expenses for tax and financial reporting purposes
were as follows:
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Allowance for loan losses ($7,758) ($4,610) ($2,582)
Leasing 9,457 6,600 1,287
Other (5,012) (2,175) (2,269)
- ---------------------------------------------------------------------------------------------------------------
TOTALS ($3,313) ($ 185) ($3,564)
==============================================================================================================
</TABLE>
The differences between the provision for income taxes and the amount computed
by applying the statutory federal income tax rate (35% in 1993 and 34% in 1992
and 1991) to income before taxes were as follows:
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pretax income at statutory rates $78,584 $56,063 $41,927
Add (deduct):
State income tax, net of federal tax benefit 5,429 4,380 3,227
Tax-exempt interest income (11,279) (12,677) (14,768)
Non-deductible interest expense 964 1,160 1,747
Amortization of goodwill 1,499 1,101 1,116
Other (1,205) 619 60
- ---------------------------------------------------------------------------------------------------------------
TOTALS $73,992 $50,646 $33,309
===============================================================================================================
</TABLE>
52
<PAGE> 37
The components of the net deferred tax asset as of December 31, 1993, were as
follows:
<TABLE>
<S> <C>
Deferred tax assets:
Allowance for loan losses $ 48,687
Other 26,792
- --------------------------------------------------------------------------------------------------------------
Total deferred tax assets 75,479
- --------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
Depreciation (8,551)
Leasing (23,736)
Other (15,175)
- --------------------------------------------------------------------------------------------------------------
Total deferred tax liabilities (47,462)
- --------------------------------------------------------------------------------------------------------------
Net deferred tax asset $ 28,017
==============================================================================================================
</TABLE>
Deferred tax liabilities include $6,194,000 related to the tax effect of
unrealized securities gains under SFAS No. 115, which are recorded in equity.
The deferred tax asset above is net of an insignificant valuation allowance.
The Company has sufficient refundable taxes paid in available carryback years
to realize its recorded deferred tax asset.
NOTE L - SUPPLEMENTAL INCOME STATEMENT INFORMATION
The following provides further analysis of other non-interest expense for the
years ended December 31:
<TABLE>
<CAPTION>
(In Thousands) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Other expense:
Communications $ 20,017 $ 18,085 $16,777
Professional services 25,420 18,909 14,805
Business development 12,795 10,771 9,422
Other 64,062 68,360 49,060
- --------------------------------------------------------------------------------------------------------------
$122,294 $116,125 $90,064
===============================================================================================================
</TABLE>
NOTE M - FAIR VALUES OF FINANCIAL INSTRUMENTS
This summarizes the Company's disclosure of fair values of financial
instruments made in accordance with the requirements of SFAS No. 107:
<TABLE>
<CAPTION>
(In Thousands) December 31, 1993 December 31, 1992
- ---------------------------------------------------------------------------------------------------------------------
Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 607,831 $ 607,831 $ 540,548 $ 540,548
Federal funds sold and other
short-term investments 49,626 49,626 99,499 99,499
Assets held for sale 258,506 258,506 198,759 198,759
Securities held to maturity 1,278,007 1,327,228 3,756,224 3,841,289
Securities available for sale 2,454,760 2,454,760 - -
Loans, net 9,115,342 9,336,909 7,298,866 7,402,234
Interest receivable and other assets 143,534 143,534 158,496 158,496
Liabilities:
Deposits 11,515,311 11,555,463 10,082,241 10,122,263
Federal funds purchased and
other short-term borrowings 1,456,460 1,456,460 1,331,080 1,331,080
Interest payable and other liabilities 156,280 156,280 153,816 153,816
Long-term debt 469,985 422,781 258,243 226,540
Off-balance sheet instruments -
asset (liability):
Interest rate swaps in a net
receivable position 10,568 29,428 3,461 11,512
Commitments to extend credit (8,883) (22,716) (5,402) (15,202)
Standby letters of credit (573) (573) (437) (437)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
SouthTrust Corporation
In cases where quoted market prices are not available, fair values have
been estimated using present value or other valuation techniques. These methods
are highly sensitive to the assumptions used, such as those concerning
appropriate discount rates and estimates of future cash flows. In that regard,
estimates presented herein are not necessarily indicative of the amounts the
Company could realize in a current settlement of the underlying financial
instruments, and they are not intended to represent a measure of the under-
lying value of the Company.
The following methods and assumptions were used by the Company in
estimating the fair value provided above:
CASH AND DUE FROM BANKS, FEDERAL FUNDS SOLD AND OTHER SHORT-TERM INVESTMENTS
The carrying value of highly liquid instruments, such as cash on hand, interest
and noninterest bearing deposits in financial institutions, and federal funds
sold and other short-term investments are considered to approximate their fair
values.
ASSETS HELD FOR SALE AND SECURITIES
Substantially all of the Company's securities held for investment and assets
held for sale, consisting primarily of loans held for sale to third-party
investors, have a readily determinable fair value. Fair values for these
securities are based on quoted market prices, where available. If not
available, fair values are based on market prices of comparable instruments.
The carrying amount of accrued interest on securities approximates its fair
value.
LOANS, NET
For loans with rates that are repriced in coordination with movements in market
rates and with no significant change in credit risk, fair value estimates are
based on carrying values. The fair values for other types of loans are
estimated by discounting future cash flows using current rates at which loans
with similar terms would be made to borrowers of similar credit ratings. The
carrying amount of accrued interest on loans approximates its fair value.
DEPOSITS
The fair value of deposit liabilities with no stated maturity are disclosed as
the amount payable on demand at the reporting date (i.e., at their carrying or
book value). The fair values of fixed maturity deposits are estimated using a
discounted cash flow calculation that applies rates currently offered for time
deposits of similar remaining maturities. The carrying amount of accrued
interest payable on deposits approximates its fair value.
The economic value attributable to the long-term relationship with
depositors who provide low-cost funds to the Company is considered to be a
separate intangible asset and is excluded from the presentation above.
SHORT-TERM BORROWINGS
The carrying amounts of federal funds purchased, borrowings under repurchase
agreements, and other short-term borrowings approximate their fair values.
LONG-TERM DEBT
The fair values of the Company's long-term debt are based on quoted market
prices of similar instruments or estimates using the Company's incremental
borrowing rates for similar types of instruments.
OFF-BALANCE-SHEET INSTRUMENTS
Off-balance-sheet financial instruments include commitments to extend credit,
standby letters of credit, interest rate swaps, and similar instruments. The
fair value of such instruments is estimated using current settlement values or
based on fees currently charged for similar arrangements in the market place,
adjusted for changes in terms and credit risk as appropriate.
54
<PAGE> 39
NOTE N - CONDENSED PARENT COMPANY FINANCIAL STATEMENTS
SouthTrust Corporation Parent Company
STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
December 31
(In Thousands) 1993 1992
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash-on-demand deposit* $ 1,309 $ 1,846
Interest-bearing time deposits* 59,954 100,398
Securities 71,669 11,908
Loans 2,486 4,497
Loans to subsidiaries* 72,806 49,731
Investment in subsidiaries*
Banks and bank holding companies 1,184,312 962,802
Non-banks 12,025 10,490
Other assets 29,408 20,487
- ---------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $1,433,969 $1,162,159
===============================================================================================================
LIABILITIES
Short-term borrowings $ 15,918 $ 19,641
Other liabilities 61,285 46,383
Long-term debt 305,000 235,783
- ---------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 382,203 301,807
STOCKHOLDERS' EQUITY 1,051,766 860,352
- ---------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,433,969 $1,162,159
===============================================================================================================
</TABLE>
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Year Ended December 31
(In Thousands) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
From subsidiaries:*
Dividends $ 58,857 $ 42,242 $54,784
Management fees 37,895 30,262 24,826
Interest 5,844 4,459 2,613
Other 1,014 2,191 2,307
- ---------------------------------------------------------------------------------------------------------------
TOTAL INCOME 103,610 79,154 84,530
- --------------------------------------------------------------------------------------------------------------
Expense:
Salaries and employee benefits 21,741 16,494 12,639
Interest 16,343 13,981 12,607
Other 17,749 22,731 13,172
- --------------------------------------------------------------------------------------------------------------
TOTAL EXPENSE 55,833 53,206 38,418
- --------------------------------------------------------------------------------------------------------------
Income before income taxes and equity in undistributed
net income of subsidiaries 47,777 25,948 46,112
Income taxes (credit) (4,176) (5,091) (2,484)
- ---------------------------------------------------------------------------------------------------------------
INCOME BEFORE EQUITY IN UNDISTRIBUTED
NET INCOME OF SUBSIDIARIES 51,953 31,039 48,596
Equity in undistributed net income of subsidiaries:*
Banks and bank holding companies 97,224 81,850 40,119
Non-banks 1,358 1,357 1,291
- ---------------------------------------------------------------------------------------------------------------
NET INCOME $ 150,535 $114,246 $90,006
===============================================================================================================
</TABLE>
*Eliminated in consolidation.
55
<PAGE> 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
SouthTrust Corporation
NOTE N - CONDENSED PARENT COMPANY FINANCIAL STATEMENTS (Continued)
SouthTrust Corporation Parent Company
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31
(In Thousands) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $150,535 $114,246 $ 90,006
Less equity in undistributed net income of subsidiaries (98,582) (83,207) (41,410)
- --------------------------------------------------------------------------------------------------------------
Income before equity in undistributed net
income of subsidiaries 51,953 31,039 48,596
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision (credit) for:
Depreciation of premises and equipment 1,072 723 333
Amortization of intangibles 2,504 2,513 2,556
Deferred income tax provision (benefit) (1,748) (8,940) 1,556
Realized and unrealized net loss on sale of securities 231 106 360
Net (increase) decrease in other assets (7,096) 2,257 (410)
Net increase (decrease) in other liabilities 20,813 4,359 19,297
- --------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 67,729 32,057 72,288
INVESTING ACTIVITIES
Proceeds from maturities of securities 20,362 4,041 0
Proceeds from sales of securities 0 13,031 2
Purchases of securities (80,366) (15,289) 0
Capital contributions (44,318) (113,914) (41,071)
Purchase of subsidiaries 0 (41,746) (885)
Net (increase) decrease in:
Short-term investments 40,444 (25,189) (37,140)
Loans to subsidiaries (23,075) (30,969) 587
Loans 2,010 4,946 1,218
Premises and equipment (1,138) (7,016) (558)
- --------------------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (86,081) (212,105) (77,847)
FINANCING ACTIVITIES
Proceeds from issuance of:
Common Stock 4,696 120,334 52,755
Long-term debt 100,000 100,000 0
Payments for:
Long-term debt (30,783) (2,515) (1,815)
Repurchase of Common Stock (252) (485) (104)
Cash dividends (52,124) (34,118) (29,542)
Net increase (decrease) in short-term borrowings (3,722) (3,273) (14,614)
- --------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 17,815 179,943 6,680
- --------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND DUE FROM BANKS (537) (105) 1,121
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR 1,846 1,951 830
- --------------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF YEAR $ 1,309 $ 1,846 $ 1,951
==============================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD FOR INTEREST $ 15,829 $ 12,971 $ 12,618
==============================================================================================================
</TABLE>
56
<PAGE> 41
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
SouthTrust Corporation
TO THE BOARD OF DIRECTORS OF SOUTHTRUST CORPORATION:
We have audited the accompanying consolidated statements of condition of
SouthTrust Corporation and subsidiaries (a Delaware corporation) as of December
31, 1993 and 1992, and the related consolidated statements of income, changes
in stockholders' equity, and cash flows for each of the three years in the
period ended December 31, 1993. These financial statements are the
responsibility of the Company's Management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by Management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the Consolidated Financial Statements referred to above present
fairly, in all material respects, the consolidated financial position of
SouthTrust Corporation and subsidiaries as of December 31, 1993 and 1992, and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles.
As discussed in Note A to the Consolidated Financial Statements, effective
December 31, 1993, the Company changed its method of accounting for investment
securities.
Birmingham, Alabama,
February 4, 1994
57
<PAGE> 1
Exhibit (21)
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
State of
Incorporation
-------------
<S> <C>
SouthTrust Corporation ................................. Not Applicable
SouthTrust Bank of Alabama, N.A. (1)
SouthTrust Mortgage Corporation ................. Delaware
SouthTrust Mobile Services, Inc. ................ Alabama
SC Realty, Inc. ................................. Delaware
Jackson, Incorporated ........................... Delaware
Magic City, Inc. ................................ Delaware
Magic City Three, Inc. ........................ Delaware
Magic City Two, Inc. ............................ Delaware
SouthTrust Data Services, Inc. .................. Alabama
SouthTrust Technology, Inc. ................... Alabama
SC Funding Corporation .......................... Delaware
SouthTrust Investment Services, Inc. ............ Delaware
SouthTrust Bank of Dothan, N.A. ..................... (1)
Wiregrass, Inc. ................................. Delaware
SouthTrust Bank of Calhoun County, N.A. ............. (1)
Piedmont, Inc. .................................. Delaware
SouthTrust Bank of Mobile ........................... Alabama
SouthTrust Bank of Huntsville, N.A. ................. (1)
Redstone, Inc. .................................. Delaware
SouthTrust of Covington County, Inc. ................ Delaware
SouthTrust Bank, N.A. ........................... (1)
Riverboat, Inc. ............................... Delaware
SouthTrust Bank of Central Alabama .............. Alabama
SouthTrust Bank of Covington County, N.A. ....... (1)
Rodeo, Inc. ................................... Delaware
Finance South, Inc. ............................. Alabama
SouthTrust Bank of Cullman, N.A. .................... (1)
Germantown, Inc. ................................ Delaware
SouthTrust Bank of Etowah County, N.A. .............. (1)
Noccolula, Inc. ................................. Delaware
SouthTrust Bank of Baldwin County ................... Alabama
SouthTrust Bank of Marion County .................... Alabama
SouthTrust Bank of the Quad Cities .................. Alabama
SouthTrust Bank of Marshall County, N.A. ............ (1)
Lakeside, Inc. .................................. Delaware
SouthTrust Bank of Selma, N.A. ...................... (1)
SouthTrust Bank ..................................... Alabama
SouthTrust Bank of Randolph County, N.A. ............ (1)
SouthTrust Bank of Tuscaloosa County, N.A. .......... (1)
SouthTrust Bank of Russell County ................... Alabama
SouthTrust Bank of Coffee County .................... Alabama
SouthTrust Bank of Talladega County ................. Alabama
SouthTrust Bank of Ozark ............................ Alabama
SouthTrust Bank of Morgan County .................... Alabama
</TABLE>
<PAGE> 2
Exhibit (21) (continued)
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
State of
Incorporation
-------------
<S> <C>
SouthTrust Bank of Walker County .................... Alabama
SouthTrust Bank of Columbus, N.A. ................... (1)
SouthTrust of Florida, Inc. ......................... Florida
SouthTrust Bank of Northwest Florida .............. Florida
Holmes Capital Corporation ...................... Florida
SouthTrust Bank of Central Florida ................ Florida
SouthTrust Bank of Volusia County ................. Florida
SouthTrust Bank of Sarasota County ................ Florida
SouthTrust Bank of Northeast Florida, N.A. ........ (1)
SouthTrust Bank of Orlando ........................ Florida
SouthTrust Bank of West Florida ................... Florida
SouthTrust Estate & Trust Company ............... Florida
SouthTrust of Southwest Florida, Inc. ............. Florida
SouthTrust Bank of Southwest Florida, N.A. ...... (1)
SouthTrust of South Carolina, Inc. .................. South Carolina
SouthTrust Bank of Dillon County .................. South Carolina
SouthTrust Bank of Charleston, N.A. ............... (1)
Cobblestone Financial Services, Inc. ............ South Carolina
SouthTrust of Tennessee, Inc. ....................... Tennessee
SouthTrust Bank of Middle Tennessee ............... Tennessee
SouthTrust of Georgia, Inc. ......................... Georgia
SouthTrust Bank of Georgia, N.A. .................. (1)
SouthTrust Estate & Trust Company of
Georgia, N.A. ................................. (1)
Olympic City, Inc. .............................. Delaware
Dekalb Finance Subsidiary, Inc. ................. Georgia
Consumer Financial Services, Inc. ............... Georgia
SouthTrust of North Carolina, Inc. .................. North Carolina
SouthTrust Bank of North Carolina, N.A. ............. (1)
SouthTrust Bank of Central Carolina ................. North Carolina
Friendly Financial Center, Inc. ................... North Carolina
First State Service Corporation ................... North Carolina
CK Insurance Agency, Inc. ......................... North Carolina
SouthTrust Leasing, Inc. ............................ Delaware
SouthTrust Financial Services, Inc. ................. Alabama
Southern Financial Advisors, Inc. ................... Alabama
SouthTrust Securities, Inc. ......................... Delaware
SouthTrust Insurance Agency, Inc. ................... Alabama
SouthTrust Life Insurance Company ................... Arizona
SouthTrust Community Reinvestment Corporation ....... Alabama
Reef Resorts, Incorporated .......................... Florida
</TABLE>
(1) National Banks are chartered under the laws of the United States.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report incorporated by reference in this Form 10-K, into the Company's
previously filed Registration Statements File Nos. 33-25513, 33-33187,
33-43118, 33-46804, 33-50107 and 33-55746.
/s/ Arthur Andersen & Co.
Birmingham, Alabama
March 9, 1994
<PAGE> 1
EXHIBIT 24
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware corporation
(the "Company") hereby constitutes and appoints William L. Prater and Aubrey D.
Barnard, and each of them (with full power of each of them to act alone), his
true and lawful attorney-in-fact and agent for him and on his behalf and in his
name, place and stead, in any and all capacities, to sign, execute and affix
his seal thereto and file with the United States Securities and Exchange
Commission and any other regulatory authority, the annual report of the Company
for the year ended December 31, 1993 on Form 10-K under the Securities Exchange
Act of 1934, as amended, including any amendment or amendments thereto, and any
and all documents required to be filed with respect thereto, granting unto said
attorneys and each of them full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully and to all intents and
purposes as he himself might or could do if personally present, hereby
ratifying and confirming all the said attorneys-in-fact and agents, or any of
them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand and
seal this 25th day of February, 1994.
/s/ W. K. Upchurch, Jr. (L.S.)
----------------------
W. K. Upchurch, Jr.
<PAGE> 2
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware corporation
(the "Company") hereby constitutes and appoints William L. Prater and Aubrey D.
Barnard, and each of them (with full power of each of them to act alone), his
true and lawful attorney-in-fact and agent for him and on his behalf and in his
name, place and stead, in any and all capacities, to sign, execute and affix
his seal thereto and file with the United States Securities and Exchange
Commission and any other regulatory authority, the annual report of the Company
for the year ended December 31, 1993 on Form 10-K under the Securities Exchange
Act of 1934, as amended, including any amendment or amendments thereto, and any
and all documents required to be filed with respect thereto, granting unto said
attorneys and each of them full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully and to all intents and
purposes as he himself might or could do if personally present, hereby
ratifying and confirming all the said attorneys-in-fact and agents, or any of
them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand and
seal this 25th day of February, 1994.
/s/ Charles G. Taylor (L.S.)
---------------------
Charles G. Taylor
<PAGE> 3
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware corporation
(the "Company") hereby constitutes and appoints William L. Prater and Aubrey D.
Barnard, and each of them (with full power of each of them to act alone), his
true and lawful attorney-in-fact and agent for him and on his behalf and in his
name, place and stead, in any and all capacities, to sign, execute and affix
his seal thereto and file with the United States Securities and Exchange
Commission and any other regulatory authority, the annual report of the Company
for the year ended December 31, 1993 on Form 10-K under the Securities Exchange
Act of 1934, as amended, including any amendment or amendments thereto, and any
and all documents required to be filed with respect thereto, granting unto said
attorneys and each of them full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully and to all intents and
purposes as he himself might or could do if personally present, hereby
ratifying and confirming all the said attorneys-in-fact and agents, or any of
them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand and
seal this _____ day of February, 1994.
/s/ T. W. Mitchell (L.S.)
-----------------
T. W. Mitchell
<PAGE> 4
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware corporation
(the "Company") hereby constitutes and appoints William L. Prater and Aubrey D.
Barnard, and each of them (with full power of each of them to act alone), his
true and lawful attorney-in-fact and agent for him and on his behalf and in his
name, place and stead, in any and all capacities, to sign, execute and affix
his seal thereto and file with the United States Securities and Exchange
Commission and any other regulatory authority, the annual report of the Company
for the year ended December 31, 1993 on Form 10-K under the Securities Exchange
Act of 1934, as amended, including any amendment or amendments thereto, and any
and all documents required to be filed with respect thereto, granting unto said
attorneys and each of them full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully and to all intents and
purposes as he himself might or could do if personally present, hereby
ratifying and confirming all the said attorneys-in-fact and agents, or any of
them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand and
seal this 28th day of February, 1994.
/s/ William C. Hulsey (L.S.)
---------------------
William C. Hulsey
<PAGE> 5
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware corporation
(the "Company") hereby constitutes and appoints William L. Prater and Aubrey D.
Barnard, and each of them (with full power of each of them to act alone), his
true and lawful attorney-in-fact and agent for him and on his behalf and in his
name, place and stead, in any and all capacities, to sign, execute and affix
his seal thereto and file with the United States Securities and Exchange
Commission and any other regulatory authority, the annual report of the Company
for the year ended December 31, 1993 on Form 10-K under the Securities Exchange
Act of 1934, as amended, including any amendment or amendments thereto, and any
and all documents required to be filed with respect thereto, granting unto said
attorneys and each of them full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully and to all intents and
purposes as he himself might or could do if personally present, hereby
ratifying and confirming all the said attorneys-in-fact and agents, or any of
them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand and
seal this 28th day of February, 1994.
/s/ John M. Bradford (L.S.)
--------------------
John M. Bradford
<PAGE> 6
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware corporation
(the "Company") hereby constitutes and appoints William L. Prater and Aubrey D.
Barnard, and each of them (with full power of each of them to act alone), his
true and lawful attorney-in-fact and agent for him and on his behalf and in his
name, place and stead, in any and all capacities, to sign, execute and affix
his seal thereto and file with the United States Securities and Exchange
Commission and any other regulatory authority, the annual report of the Company
for the year ended December 31, 1993 on Form 10-K under the Securities Exchange
Act of 1934, as amended, including any amendment or amendments thereto, and any
and all documents required to be filed with respect thereto, granting unto said
attorneys and each of them full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully and to all intents and
purposes as he himself might or could do if personally present, hereby
ratifying and confirming all the said attorneys-in-fact and agents, or any of
them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand and
seal this 25th day of February, 1994.
/s/ Bill L. Harbert (L.S.)
-------------------
Bill L. Harbert
<PAGE> 7
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware corporation
(the "Company") hereby constitutes and appoints William L. Prater and Aubrey D.
Barnard, and each of them (with full power of each of them to act alone), his
true and lawful attorney-in-fact and agent for him and on his behalf and in his
name, place and stead, in any and all capacities, to sign, execute and affix
his seal thereto and file with the United States Securities and Exchange
Commission and any other regulatory authority, the annual report of the Company
for the year ended December 31, 1993 on Form 10-K under the Securities Exchange
Act of 1934, as amended, including any amendment or amendments thereto, and any
and all documents required to be filed with respect thereto, granting unto said
attorneys and each of them full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully and to all intents and
purposes as he himself might or could do if personally present, hereby
ratifying and confirming all the said attorneys-in-fact and agents, or any of
them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand and
seal this 26th day of February, 1994.
/s/ Herbert C. Stockham (L.S.)
-----------------------
Herbert C. Stockham
<PAGE> 8
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware corporation
(the "Company") hereby constitutes and appoints William L. Prater and Aubrey D.
Barnard, and each of them (with full power of each of them to act alone), his
true and lawful attorney-in-fact and agent for him and on his behalf and in his
name, place and stead, in any and all capacities, to sign, execute and affix
his seal thereto and file with the United States Securities and Exchange
Commission and any other regulatory authority, the annual report of the Company
for the year ended December 31, 1993 on Form 10-K under the Securities Exchange
Act of 1934, as amended, including any amendment or amendments thereto, and any
and all documents required to be filed with respect thereto, granting unto said
attorneys and each of them full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully and to all intents and
purposes as he himself might or could do if personally present, hereby
ratifying and confirming all the said attorneys-in-fact and agents, or any of
them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand and
seal this 28th day of February, 1994.
/s/ Allen J. Keesler, Jr. (L.S.)
-------------------------
Allen J. Keesler, Jr.
<PAGE> 1
EXHIBIT 99 (2)
Undertaking Regarding Registration Statement on Form S-8
For purposes of complying with the amendments to the rules governing
Form S-8 under the Securities Act of 1933, the undersigned registrant
hereby undertakes as follows, which undertaking shall be incorporated by
reference into the registrant's Registration Statement on Form S-8 No.
33-33187 filed January 26, 1990:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the act and will be governed by the final
adjudication of such issue.
